Now I have to apologize, I don’t like to bash the work of other consultants and professionals, particularly some that I respect, as in the case of the authors of this article. I also realize the constraints a short article puts on an author in expressing ideas on very complex topics.
However, the authors display a bias and a lack of understanding, that I also once had, about the Commodity or Transactional Sale. I think it’s a bias that any one who comes from a complex selling environment, particularly those of us from the cowboy environment of high technology sales.
They mis-characterized the Commodity — Transaction Sale as the following:
• Simple product or service—perceived as a commodity by the buyer
• One or two calls—perhaps telemarketing
• One or two apparent decision makers
• Low risk
• Relationships less important—buyer views the sales professional as vendor
• Technique selling
• Price quote
• Price and availability more important
By contrast they characterized the Complex Sale as:
• Complicated product or service
• Multiple consultative calls, demonstrations, and presentations—perhaps technical sales support
• Multiple decision makers—executive committee or board-level decision
• High risk
• Relationships very important—buyer may view the sales professional as a business consultant
• Value-based selling
• Proactive sales proposal or response to a Request for Proposal (RFP)
• Return on investment (ROI) very important or required
In the past several years, I have worked extensively with organizations selling commodity products in transactional processes. I have come to respect the complex issues and processes involved in selling commodity products and services. A consultative approach is every bit as important in these processes as in the complex sale, but the process and the manner in which the sales professional creates and communicates value is different.
I agree with the authors that a commodity sale involves a product or service that is largely undifferentiated from the competitive alternatives—at least when focusing on the product itself.
After that, I disagree with virtually everything the authors claim characterizing commodity sales. Most of the organizations I work with are dealing with very large transactions, typically in the $10’s of millions, sometimes in the $100’s of millions. While some telemarketing (by the way, professional telesales is neither distinguished by the complexity of the selling process or the value of the deal–I have seen extraordinary telesales organizations selling very complex solutions, executing difficult transaction sales, all of high value). I have seen many of these large commodity transactions take many calls — all with rigorous discovery, solution development, and business justification.
The majority of these deals have very high risk to the customers. Imagine, buying a commodity product–something that may be a component of your own products and not getting the deliveries on time. The whole revenue stream of a company may be at risk. Or imagine quality problems and the impact they have on customer satisfaction, profitability, and revenue. As a very real example, consider the plight of most of the major Notebook manufacturers with the battery problems they have faced. Those problems had tremendous costs–financial, reputation, and other wise. In fact one of the major considerations in many of these commodity transactions is second sourcing because customers cannot afford to put their companies at risk in case a supplier fails for any reason.
The authors also characterize the relationship as less important—they view the sales professional as a vendor. Any sales professional that does not create value for their customer, regardless of a commodity or complex sales process is a vendor. Relationships, establishing trust and confidence with the customer is critical in any sale. Making sure that you are creating value and addressing the customer needs is the hallmark of any sales professional–regardless of whether it is a commodity or transaction sale.
Perhaps the area where I disagree the most is the authors characterize the commodity sale as “technique selling” where the complex sale is “value-based selling.” Are we to believe that sophisticated buyers of high value, important commodity products are more susceptible and willing to be closed on the “puppy dog approach” than by sales professional who demonstrates real ROI on the transaction.
This is one of the most misunderstood part of value based, consultative, or solution selling. The sales professional must ALWAYS create VALUE. What customers value will vary from customer to customer, deal to deal—regardless of whether it is a commodity or a complex sale. In the so called commodity sale, things like quality, timely delivery, management of the supply chain or logistics processes, facilitating and improving the procurement process and many others are critical elements of value in the commodity sale.
Pricing is important in commodity sales just as it is in complex sales. Building a business case that produces superior return at acceptable/manageable risk is mandatory for all sales cycles.
I can appreciate the mis-impression the authors have about commodity — transaction sales. I suffered from a similar ignorance until some valued clients showed me how mistake I was.
There are complex and commodity selling processes. They are different, they buyers and their needs are different. Each carries its own challenges, success in each requires great sophistication on the part of the sales professional in building relationships, understanding the customer needs and presenting solutions that represent real value in addressing those needs.