Making The Leap

December |2009

From Reactive to Proactive Sales

Making the Leap I From Reactive to Proactive Sales

Businesses can no longer sit back passively and hope customers come a knocking. The proactive pursuit of potential clients must be made a part of any companies’ day to day sales strategy, and reflect in its activities.

In today’s competitive marketplace, in practically every sector, obtaining new business is more difficult than it has ever been. Numerous factors are behind this:

Number of Alternatives

Potential clients have more alternatives in terms of where they want to take their business to than ever before. The number of competitors, the channels they can be accessed by, and the products and services they provide have all contributed towards giving the potential client a wealth of options.

Example – Booksellers like Waldenbooks have faced an extreme growth in competition through the proliferation of the internet channel, where companies like Amazon.com and Wal-Mart have thrived in winning clients. This shift in channel usage has resulted in the closing of hundreds of Waldenbooks bookstores (2oo to close this coming month alone), and countless thousands of smaller shops across the United States.

Pricing

Winning on price has become extremely difficult, as competitors are now more than ever able to match any price offering. Companies must look to differentiate their offerings in alternative ways, as pricing advantages can no longer easily be conveyed to the potential client.

Example – Computer maker Dell used to enjoy a significant pricing advantage against its premium PC OEM competitors, particularly benefiting from its supply chain efficiencies and direct sales channels. This advantage, however, has since been stripped away by the likes of other premium brands like HP and Lenovo, who have copies some of Dell’s efficiency-driving tactics, and introduced some of their own.

Product / Service Features

Similar to pricing, competitors are able to rather easily replicate the features of any given competitors’ product or service. Unless a specific patent and its relevant protection is in place, very few companies can ensure their given product or service will not be duplicated by a competitor, thus killing its marketplace advantage.

Example – Splenda, the artificial sweetener, has recently lost considerable market share to a Chinese rival who copied every aspect of its own product. The company falsely believed no competitor could produce the sweetener’s core

chemical sucralose on a commercial scale, a belief that was dispelled when they found the rival’s product available in Wal-Mart stores across the United States.

In light of these market dynamics, companies can no longer rest on their laurels – a passive approach to sales and customer acquisition simply will not work in most cases (surely not in a way that will allow companies to hit their aggressive sales targets). To succeed in such a competitive, consumer-empowered atmosphere, companies must take to the streets, literally.

Proactive vs. Reactive Sales in a Given Store in a Given Sector

Reactive Sales World

In a reactive sales world, a given company’s sales rep waits for the customer to come in through the door, and then tries to sell to that customer (who is likely going to buy something anyway, regardless of the sales rep’s support / service). In this reactive sales world, the customer drives the relationship, dictating what he or she may buy, determining the rules of the game. The sales rep is ultimately a passive bystander in most cases, and adds little value besides being an information provider.

Sales reps in a reactive sales world come and go, with very high turnover associated with the position. Minimal training is provided to such reps, and thus, they understand little about the needs of their potential customers. In this store, the sales rep can do little to win over potential customers who show resistance to a possible purchase – their ability and motivation to make the sale happen are limited.

In such a reactive sales world, a company’s ability to drive people to the store determines the overall possible success of the store, and as such, requires extensive reliance on advertising, word-of-mouth, promotions, etc. That is, no matter how proficient and savvy the sales reps are, there is a constraint, and that is total number of visitors to the store.

The measure of success of this store in a reactive sales world is total sales per square foot, and for the employee, number of sales registered to him or her (in more advanced worlds, their mystery shopping service score). In such an environment, a store can only go so far as increasing their conversion rate – the percentage of potential customers walking through the door that make a purchase.

With such an approach in place, the location of a store dictates the overall success of the store to a very strong degree. As goes the neighborhood, so goes the store – high foot traffic spells success, the reverse, failure. In a reactive sales world, companies open and close stores on a constant basis, assessing performance quarterly to determine which stores to keep open and which ones to close.

Proactive Sales World

In a proactive sales world, the employee spends a great deal of time pursuing customers, in the most efficient manner possible relative to their specific situation (via emails, phone calls, door-to-door visits, etc.). In this proactive world, leads are given to the employee, and he or she is responsible for pursuing these leads. The store and its employees are not limited to the business they can drum up from customers that visit their store, but rather, by the additional number of potential clients they can get in touch with in a given amount of time.

In this proactive sales world, the store is very well educated about potential clients in the area. They know at any given time their market share, what their competitors are doing and which customer segments they are succeeding with, and which potential clients they have the highest probability of winning over if visited.

In this approach, products and services are matched to potential clients before a visit is made, and pitches to win them over are also ready. Sales reps are no longer turnover prone, but rather, well trained and motivated through financial and other means. These sales reps know the products and services inside out, know the needs of their potential customers, and can convert resistors much more effectively.

Sales per square foot are still a measure of success, but are complemented by targets around potential clients visited, leads generated, leaflets distributed, etc. The store is no longer exclusively reliant on advertising, promotions, and word-of-mouth for new business, their location also no longer limits their potential sales.

Stores that succeed in the company now do so because of their sales reps’ abilities to win over customers, not just inside, but outside the store. Reliance on location, advertising, and promotions becomes secondary to the ability of the sales force.

Proactive Sales Applicability

A proactive sales model is not applicable in every sector – sending out sales reps from a clothing store to visit potential clients, for example, will yield minimal results. Looking at this issue from the potential client’s perspective will point to the sectors that can benefit from this model.

For example, a small business opens up shop in a given neighborhood. The business is visited by an electronics store sales rep to discuss their computing needs. They then get a visit from a local bookstore that offers to bring a given set of business magazines and newspapers on a regular basis to their door. Then the local telecommunications dealer stops by to discuss their fixed, mobile, and internet service needs. A bank sales rep also comes by to open up their business checking account. Finally, an insurance sales rep comes by to discuss the businesses overall insurance needs.

This is only a scenario centered around a new business that only gives some examples of sectors than can benefit from using a proactive sales approach, similar scenarios can be built around new residents, existing residents, existing businesses, etc.

Leads

Leads are not always required to visit a potential customer, but they go a long way towards driving efficiency in the proactive sales effort. Leads can be obtained in numerous ways:

Through a listing of newly opened businesses published by city / government entities Through realtors who can provide this information for a fee Through searching on the internet for directories Through using actual phone directories

At a minimum, companies in sectors that can benefit from such a proactive sales approach deserve to try it out as a pilot. This requires minimal training, with a focus on just one store, to see if the benefits derived are of a sufficient level to scale out the approach to the entire sales network. Companies ignoring considering the utilization of such an approach are doing so at their own peril, as their competitors likely will not.

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