Cross Selling or Cross Purposes?

Author: Ford Harding

Cross Selling is not Working

TopTek recently acquired a consulting and systems-integration firm, expecting to profit from the software sales that can naturally flow from consulting engagements. However, the integrated organization is not working as effectively as the two companies did when they were separate. TopTek’s consultants and salespeople are trying to work together but, judging by complaints from top customers, are doing a poor job. 

From the case, I was able to see the difficulties generated by cross-selling activity from a customer perspective and contrasts the customer experience when the two parts of the business collaborate and when they compete. It is important for a company to develop coherent offerings for the customer, segment them appropriately according to what they look for, and ensure that there is a shared organizational understanding of the growth strategy of the combined business, such as TopTek in this case.

(http://hbr.org/product/cross-selling-or-cross-purposes-hbr-case-study)

Key Issues

• They are not working towards a common goal. As a cross-functional company, they need to work together in order to maximize their sales. If they communicate better and work as one same company, they would succeed. 
• The consultants are unhappy because commissions on products they sell go to the salesperson that made the original sale.
• The sales force is also unhappy because they believe that consultants don’t help much in winning new business.
• They need to clarify how new business is to be obtained and how existing business is to be retained and expanded. Once this point is reach, they can make each employee accountable for what they do and give back to the company.

The CEO needs to state the company’s new, twofold value proposition, the consultants need to broaden their knowledge and gain a deeper understanding of the products and technologies, and the salespeople need to adopt a solutions approach.

CEO Point of View

What can possibly be going wrong? We are a very successful company with outstanding sales personnel,   we just acquired and merged with one of the top consulting and systems-integration firms, but we still can't generate the profit that we want and we are loosing our customers!

From what I've heard, sales and consulting personnel are not getting along and simply can not work together. They are constantly fighting over the commissions and they are not performing as they did when we were separate firms. How can I solve this?

I should probably hire a qualified manager who can help me serve as a liaison between the two of them and help them collaborate with each other. We need to set a common goal, and having someone in charge of doing that will help me solve this issue and take some pressure off my shoulders. Or perhaps, it simply was a bad idea to merge the two companies. This might have been a bad idea and we may be facing critical times in our company now. I need to have a meeting with the executive board to discuss this thoroughly.  

Cross Selling Examples

These are some examples of how cross selling works, especially in areas or places were most of us have contact with. However, we don't realize that there is some type of cross selling product going on.

The Sales Learning Curve

Author: Mark Leslie and Charles Holloway 

Do Not Ramp Up Sales Immediately 

When a company develops a new and innovative product, their first step is usually investing a lot of money and hiring a large number of sales persons in order to get their product out in the market and gather customers. However,  hiring a full sales force too fast just leads the company to burn through cash and fail to meet revenue expectations. Before it can sell the product efficiently, the entire organization needs to learn how customers will acquire and use it, known as "the sales learning curve". In this case, Scalix, a software company, develops an e-mail and calendaring program hosted on Linux, but struggled to get its sales model right.

Most companies expect sales reps to go from new employees to fully productive salespeople during their first months on the job, as they learn more about the product, the customers, the market, and the competition. However, the company needs to understand and examine their customers first, in order to meet their needs and better satisfy what they are looking for allowing them to maximize the sales of their product. At the same time, the sales representatives will learn about the buyer, what they want, how to approach them and more importantly, adjust their sales strategy to the sales curve and stage of the product or company.  

Key Issues

• Sales Representatives must earn how to sell the product before trying to convince a customer. 
• Sales force capacity was increased too fast. 
• The Product (email) was presented too fast.

Proposed Solutions

• The sales curve of a product varies and the salesperson must adapt to it in order to maximize sales. 
• Before selling the product efficiently you need to look at the sales curve and increase the sales force once you know how the customers reacted to the new product. 
• Having the customers see and maybe try the product before they buy it helps them understand why it is something they want to have, as well as understand the features it has in a more hands-on experience. 

Points of View

Seller: The seller has just created a new and innovative product which they want to implement and put in the market a soon as possible to make profit, increase their number of customers, and increase their "power" in their respective work area. They focus and invest a lot in the sales of the product, as they believe they need to reach as many customers as possible. 

Buyer: The product is great, but they still need to adjust some things. We are not willing to buy and invest in such product since it is so new and there is no proof that it is effective and reliabe as the company says. 

Business Models over Business Plans

Most Valuable Proposition

IT Doesn't Matter by Nicholas Carr

Book Published by N. Carr.

This is a very Interesting article by Nicholas Carr were has created a lot discussion in the IT scholarly field with nearly 400 articles citing his article "IT Doesn't Matter" published in Harvard Business Review in May 2003 (Google Scholar, 2007). The main thrust of his article is that organizations should treat information technology (IT) as a commodity in which it should attempt to keep costs to a minimum, minimize vulnerabilities, and avoid risk-taking. By comparing information technology to other commoditized industries like the railroads and electricity, Carr attempts to convince his audience of executive management and IT leaders that IT's role within an organization should not be treated much differently than any other cost it seeks to minimize. Carr believes that organizations should not attempt to build competitive advantage through IT investment because advantages built with it are short-lived as the innovation spreads through the industry and becomes commoditized.

Link to the Article:

http://nofieiman.com/wp-content/lectures/MIS-IT-doesnt-matter.pdf

Airwide International Case

Author: John Zeiro

What is the case about?

Airwide International was one of the top suppliers of commercial and residential air conditioning systems in Europe, with a growing presence in the attractive markets of Asia. Increasing competition from Chinese and International manufacturers coupled with a sales organization built primarily by hiring (from other industries) and retraining have produced a pattern of uneven sales. At a recent national sales meeting, the performance of the Shanghai region surfaced as an area of concern for senior management. The transition from product selling to key account selling has met with obstacles; primary among them is the insufficient commitment of some area sales leaders. A review meeting with a Shanghai’s sales leader reveals some of the problems and provides the Sales VP an opportunity to go over the essence of Key Account Management.

(http://caseseries.thunderbird.edu/case/airwide-international-china-key-account-selling)

Becoming Market-Driven, Not Sales-Driven

As marketing has entered the 21st Century, a significant change is taking place in the way companies interact with customers. The traditional view of marketing as a simple exchange process—a concept known as transaction-based marketing—is being replaced by a different, longer-term approach. Traditional marketing strategies focused on identifying prospects, converting them to customers, and complete sales transactions, exactly what Airwide International was doing.

Airwide International

However, today’s marketers realize that, although it remains important, attracting new customers is truly an intermediate step in the marketing process. It is vital to establish enduring relationships with the customer, better described as the one that “comprises several individuals and internal groups within the account”, in order to better understand their needs and move consistently in the same direction of purchase.  Additionally, it is important to understand how to work harmoniously within the account and influence each of the internal areas, referred to by Mr. Carpenter as “Strategic Account Selling”.

Nonetheless, being a long-time provider for a company does not guaranty the seller that the customer will take the product. Airwide International was in a position in which they were losing their old customers to mid-size companies, who as described by Mr. Wei, were reaching the customers first and were able to accommodate and “plant their seeds” because they were not using the appropriate tools (i.e. social media and the Internet). It is important for companies to have the appropriate IT to grow and increase their power and be able to minimize the number of competitors and new entrants to the business. 

Key Issues

• Sales-Driven vs. Market-Driven
• Doubling proposals and increased incentives are not working.
• Customers say that the proposals are perfect but do not end up taking them.

Suggested Solutions

• Become a Market-Driven Company: Use market knowledge to determine the corporate strategy of an organization. A market driven organization has a customer focus, together with awareness of competitors, and an understanding of the market. (BNET)
• Use a Resonating Focus when selling, which requires knowledge of how own market offering delivers superior value to customers, compared with the next best alternative, as well as, customer value research.
• "They need rejuvenation with practical and tactical assistance" says Mr. Wei Xiuping 

Seller's Point of View

From the seller's point of view, it must be very frustrating to see that your growth in the last quarter was of only 2%, especially when you are one of the top suppliers of commercial and residential air conditioning systems in Europe and Asia. However, being in the sales representative position is even more frustrating since your a just an employee and can get fired in any minute. You are one of the top sales representative of the company with great prestige but you are not able to close a deal with any customer, not even with your 10-year old customers. Not because your skills are not good enough or the product is bad, but because the company has to take a new direction on its sales and how it approaches the customers.