Transactional vs. consultative selling is somewhat of a buzz phrase in the industry, but what does it really mean? How can you implement consultative selling, and what will it mean for your organization?
Transactional vs. consultative selling, defined
Transactional selling is typically very product-focused. It’s pretty much the way sales were done in the past. You take a customer out to lunch, tell them about your new product and what it does, and they decide whether or not they’d like to buy. If they buy the product and it doesn’t meet their needs, they might call support, or perhaps they decide to go with your competitor next time, but you, the sales rep, are pretty much done with the transaction.
Consultative selling, on the other hand, focuses on you being less of a salesperson and more of a business partner to your customers. A consultative seller will research the company, get to know them and their business pain points, and then help them decide if your product will help them solve a business problem or not. If the product doesn’t work out, you’ll be around to help implement correctly or make appropriate changes, and the relationship will continue years into the future.
These days, business to business (B2B) customers expect consultative selling. If your company isn’t willing to provide that, they will likely use another provider. So how can you be this consultant?
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What it means to be consultative
You have to understand your customer. When you want to target a vertical or industry, make sure you speak their language. Find out what problems they’re trying to solve. This will give you an understanding of their goals, and you’ll then be able to step up to the plate with tailored solutions they will understand. Tell the story from their perspective so that nothing gets lost in translation.
Do a PESTLE analysis
One way to be a true business partner is to perform a PESTLE analysis before you even see the customer. A PESTLE analysis is used to identify the external pressures that affect an organization and is similar to the more-common SWOT analysis.
Let’s look at each piece of the PESTLE analysis in more detail.
Political
How much do the government and its policies affect the organization? This could vary by country, industry, and region. A current example would be a Chinese-based company with offices in the US factoring potential tariff costs into their annual budgets.
Economic
This includes both macro- and micro-environmental factors. Macro-environmental factors are what the government can employ to affect demand, like raising interest rates. Micro-environmental factors are the way people choose to spend their money, such as buying a house or car.
Social
Social factors are the general beliefs and attitudes of the organization’s target market. They can drive a lot of consumer behavior and spending. An example of this would be valuing organic produce or eco-friendly goods.
Technological
Technology changes constantly. Is there a new device on the market that is a competitive threat to your customer? A good example would be if your customer invented a new way of manufacturing that saves them time and money, or if their competitor had and they hadn’t yet caught up.
Legal
While some industries are more regulated than others, all industries must stay within legal guidelines for advertising, consumer rights, labeling, and more. For example, more regulated industries, like health care, have to adhere to specific compliance laws like HIPAA. Failure to comply with HIPAA regularly results in fines in the millions of dollars, so if you have a product that helps ensure compliance, that could be a big selling point.
Environmental
This category was added relatively recently, in the last 15 years or so. For example, with increasing demand on resources and pressure to “go green” from both the government and consumers, many organizations have had to make major changes that have cost them time and resources.
Organizational impact
If you think that sounds like a lot of work, you’re right. Being a consultative seller takes much more effort on the front end but pays more dividends long term. Implementing this into your organization can take time and effort, but you will reap the rewards soon enough.
Customer retention and loyalty
The biggest change you should see is a huge increase in customer retention and loyalty. Customers who see you as a helping partner instead of someone who comes around, taking their money occasionally are much more likely to stay with you over time. Retaining customers is much cheaper and easier than finding new ones, so this will help you as time goes on.
Referrals
Customers who are loyal to you are likely to give you referrals or introduce you to their friends in the industry. They may even get a new account on your books if they change jobs and bring you into their new company.
Upselling
Finally, you will have more opportunities to upsell and cross-sell during consultative selling. Since you are focusing on business solutions instead of a specific product, the entire solution might contain multiple products. Also, if you’ve gained a customer’s trust, they are likely to turn to you again to help them solve new problems with more products.
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How to implement the change
All of this sounds great in theory, but how can you put it into practice? You may think shifting an entire team’s mindset from transactional to consultative isn’t easy or simple, and you’re right. It will take real work, but you will know it was worth it once you see your customer satisfaction and loyalty (as well as your revenue) increase. There are a few strategies for implementing this change.
Training
First, you have to train your sales reps on the new approach. Don’t just flood them with product training; spend a lot of time training them on how to sell in a new way. Teach them how to do PESTLE analysis and other forms of research upfront and how to be prepared for a tailored presentation to each customer.
Compensation
I once heard someone describe sales reps as “coin-operated machines,” and I’ve found that to be somewhat true. Most sales professionals are motivated, at least in some part, by money. Changing their sales plan to reflect a consultative approach, like increasing percentages for add-on services and products as a “whole solution,” can encourage them to dive deeper into customer conversations.
Restructuring
You might want to consider two types of restructuring – for your sales teams and your customers. Obviously, if your organization has a large client base, you can’t use consultative selling on every customer, so you may want to group those clients by size or spend.
Once you have your clients grouped, you can organize your sales teams around that. Inside sales teams could handle transactional and smaller customers via phone and the occasional visit. Outside teams could have smaller books of business and handle larger clients that take more time and effort. You might even consider adding more sales reps; the largest of your clients might require a team of two or even three to be the consultative seller they need.
While putting these changes in place might seem intimidating, the process is straightforward and can yield great dividends, it will surely be worth it!
