I have just finished my first reading of Ram Charan’s new book What the Customer Wants You to Know: How Everybody Needs To Think Differently About Sales, and I have to admit to being wildly surprised. Mr. Charan is a brilliant business thinker; I would put him in the same class with Peter Drucker for his contribution to business and management thought (and that is a very small class). But a book on sales?
It is rare to chance upon a book directed towards sales organizations that contributes as much as does Mr. Charan’s (this is especially true of someone who is not engaged in the study of sales on full time basis). But because of the direction in which the profession of sales is moving (requiring real business acumen) and because of Mr. Charan’s intimate consulting engagements with some of the largest companies in the world, it should come as no surprise that he is able to sketch out the plan for sales organizations who will succeed now and in the future.
I was captured on page 5 with the statement:
The heart of the new approach to selling is an intense focus on the prosperity of your customers. This is a radical departure from what most salespeople and selling organizations do. The entire psychological orientation is shifted 180 degrees. No longer do you measure your own success first. Instead you measure how well your customers are doing with your help.
Charan calls this approach value creation selling, and outlines the ways in which it differs from the way in which many salespeople and sales organization presently operate. These differences include spending more time understanding your client’s business, using capabilities and tools never used before to understand and improve the customer’s business, knowing your customer’s customers business, recognizing that this will require longer cycle times to generate orders and revenue, and a reorientation of the rewards and recognition systems led by top management in order to ensure that the new approach is effective. This approach is validated by the research Howard Stevens and HR Chally have documented in Achieve Sales Excellence, including Charan’s admonition that the salespeople are now required to lead teams that create value for the customer:
If you think about the many ways the sales job changes, you’ll realize that something important happens: the salesperson who can execute this approach is transformed into a potential general manager, with all the decision-making, analytical, leadership, and profit and loss (P&L) responsibilities that are part of that job. (page 12)
I have long argued that to be a great salesperson in today’s intensely competitive marketplace, you must first be a great business person. This starts with business acumen, which is a real necessity for the salesperson who will create value for their customer using Charan’s guidelines. To create a real differentiating and defining value, a salesperson will need to understand how to describe the physical benefits of the product or service (which is commonly taught and practiced), as well as delivering some combination of improving the customer’s margins, improving their cash flow, helping them grow revenue, ensuring ROI, improving their brand equity, and increasing their market share.
While all of this can be daunting to a salesperson (and equally daunting for the VP of sales), the book includes an outline and a framework that guides you through what Charan calls a Value Account Plan. His outline serves as an excellent template, and includes a detailed approach to collecting the necessary customer data (and this approach requires a good bit more data, especially financial data, than most salespeople have collected in the past), writing the the value proposition (including your products, services and the required investment), and documenting the business benefits to the customer described above.
These benefits Charan calls the Total Value of Ownership, as opposed to the Total Cost of Ownership. And rightfully so; the role of any sales organization is to create value, and then to capture some portion of that value for their company. The ability to improve your customer’s cash flow, or improve their revenue, or increase their market share should naturally result in the ability to share in some of the value created in the form of higher sales margins.
I don’t believe that sales organizations can act fast enough in adopting this type of approach. I am systems agnostic, believing that most sales processes and systems offer something of value for most salespeople. As far as I know, Mr. Charan does not head an organization that offers this type of sales process to organizations (although some must surely spring up), and that fact coupled with his experience consulting for many of the leading companies in the world, add even more weight to his approach. This is one of only two books (book 1, book 2)on sales that I believe must be read and implemented immediately.
See my attached slide presentation below.
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Filed under: Sales 3.0