Next in Line for Reinvention: The Art of Selling

Consultant Ram Charan Says Focus Is All Wrong; What a Customer Needs
By PHRED DVORAKJanuary 28, 2008; Page B3

Ram Charan is known for his platinum clients and his relentless schedule. The business professor-turned-management consultant says he's worked seven days a week for 30-plus years, advising executives at the likes of General Electric Co. and Verizon Communications Inc. on such topics as improving results and execution.

In his spare time, he has written or co-written 16 books, mostly on strategy and leadership.

MAKING THE SALE

Ram Charan's tips for better sales:
• Know how the customer makes money.
• Learn the customer's decision- making process.
• Build many relationships with the customer, not just through sales.
• Focus on the customer's business needs, not product features or price.
• Show how your offerings meet customer needs.

Recently, Mr. Charan turned his attention to sales, particularly from one business to another. He doesn't like what he sees. In "What the Customer Wants You to Know," published last year by Portfolio, he argues that companies need to "reinvent" the way they sell, to focus on their customers rather than product features. Mr. Charan talked to The Wall Street Journal about the problems with sales and how to fix them. An edited transcript follows.

WSJ:Why a book on sales now?
Mr. Charan: Around 2003, I began to see companies with good strategies, good technology, good costs asking, "Why are we not getting better results?" I found many companies had focused on the back end of the business: operations, accounting, finance, overhead. But the sales force had been neglected. I got horrified.

WSJ:What was wrong?
Mr. Charan: The sales function has traditionally been about execution. Most sales people are very good at connecting with the purchasing customer. They get training to know the product. And they beat the competition on price.
Now the world has changed. Copying a product became very quick. You now have competition on the Internet to beat down prices.
It has become very hard to differentiate yourself in the eyes of the customer, for business-to-business sales. So salespeople should not sell the product any more. They should find out what the customer needs, which will be a combination of products and services and thought leadership.

WSJ:Can you explain this new approach?
Mr. Charan: Salespeople need to work backwards from what the business need of the company is. Let's say I'm going to sell you this BlackBerry. I come to you and I say, "I've done some homework on your company. I think you're going to need 1,000 BlackBerrys. And in order to make your BlackBerrys fruitful, I'm going to need some information. How many users are in selling, how many in manufacturing, how many in research, how many in finance, how many on the road?"

With that information, I can design something that is useful to them. That information is proprietary. If you don't trust me, I will not get that information. Salespeople need to learn the business of the customer. They need to learn how to ask the right questions. They need to have analytic skills to diagnose a customer's business. They need to figure out who makes the decisions in a company.

WSJ:Don't most companies do this already?
Mr. Charan: No. They say how their products will reduce customers' costs. They don't touch on improvement of revenues, margins or brand image.
At [packaging company] MeadWestvaco Corp., one sales team studied the frozen-food business of a potential customer. They looked at freezer shelves in stores, and saw there was spoilage in that customer's products, partly because of the condition of the package. Shoppers were turned off.

So they redesigned the package and pitched it to the customer. They got the business, and the customer's margins and image improved.

WSJ:How does the sales force have to change?
Mr. Charan: The old salesperson: gregarious personality, very sociable. Plays golf. Goes to ballgames. Quick to link with people. Highly motivated. Long hours. Very perceptive in reading other people. The more successful ones know how to close the deal. It's still useful.
Going forward, the salesperson must build trust with the customers' people that's deeper than before and sustained over time. You cannot design a solution without information from the customer. And if the customer does not trust you, he or she will not give you information.

WSJ:What else has to change?
Mr. Charan: In the old game, one person could do the selling. In the new game, you need a team from your company. The reason you need a team is the solution you're going to create is going to come from different parts of your company.
That means salespeople have to be good leaders, to lead their team, and also persuade the customer team. Because customers also buy in teams.