Smart Selling

Thanks to years of devoted service to its customers, Sears, Roebuck & Co. was once nothing less than where America shopped. It commanded, in the words of writer Donald R. Katz, "the sort of fealty normally reserved for nations and churches." Unfortunately, nations can betray their citizens, and churches can alienate their worshippers. To see what has become of Sears' century-old bond with its customers, look at the scandal unfolding at Sears Auto Centers in California and now other states. Following a compensation shift from salaries to commissions, investigators say, the sales staff began jacking up their pay by recommending unnecessary work on customers' cars. Satisfying the customer, it seemed, wasn't the foundation of this business anymore: Meeting stiff sales quotas was.

Poor old Sears. Its case may be extreme--and it denies any systematic scheme to defraud. But its descent from the pantheon of U.S. retailers to the rogue's gallery of high-pressure peddlers mirrors a broader deterioration in the American way of selling. At Sears and elsewhere, selling once meant knowing your customers and knowing how your products could meet their needs. Hard as it may now be to believe, department stores were once filled with knowledgeable, courteous salespeople, Detroit carmakers once commanded fierce loyalty from satisfied motorists, and key suppliers such as IBM once forged deep bonds with industrial customers.

In recent years, however, as products and markets grew more complex, competition intensified, and pressure mounted for short-term results, that kind of selling has become a relic of a more leisurely, genteel age. At too many companies, large and small, selling is now based on hustle and hype rather than customer service. Small wonder that consumers and business customers alike are fed up--fed up with inattentive sales clerks, shady car dealers, and ignorant product managers.

SALESMAN-IN-CHIEF. But something is happening. Call it the death of a certain kind of salesman. Many companies are starting to focus on the way they present themselves to that most precious of resources, the customer. They're changing the way they sell, and that means rethinking everything from how salespeople are trained and compensated to the way a corporation is organized and how the chief executive spends his or her time. With their customers ever more value-conscious (BW--Nov. 11, 1991), companies are realizing that sales must join the rest of marketing--from product development to pricing and advertising--in delivering perceived benefits.

To make sales forces part of the effort to nurture relationships with customers, some companies are changing their commission-based compensation plans. Chrysler Corp. has begun paying dealers extra for high scores on customer-satisfaction surveys. And companies such as GE, Reynolds Metals, and Du Pont no longer view selling as the job of their sales force alone. Instead, they want to involve everyone from executives to engineers in knowing customers and meeting their needs. And at companies such as hardware purveyor Home Depot Inc. and Dell Computer, the CEO acts as salesman-in-chief, directing sales training, cheerleading sales staff, and infusing the company with a customer-focused selling culture.

How did the U.S. way of selling go astray in the first place? William A. Band, a customer satisfaction specialist at consultants Coopers & Lybrand, blames the postwar rise of scientific management. "The new theories emphasized narrow expertise and specialized functions inside companies," he says. "We forgot we exist to serve customers."

It didn't help that as many companies grew older and bigger, they moved further away from the spirit of their entrepreneur founders, who had built businesses by meeting needs. Later, wrenching financial restructurings distracted many companies still further. For example, Continental Airlines had a proud service tradition until its takeover and subsequent merger with People Express Airlines. Elsewhere, the elimination of vast cadres of middle managers has wiped out many companies' institutional knowledge of their customers.

Now, no company can afford to alienate a single customer with its selling approach. In every industry--from computers and steel to shoes and cars--customers have plenty to choose from: U.S. factories are capable of producing some 6 million more cars and trucks a year than the driving public can buy. More than 600 models of cars and trucks are available in U.S. dealerships. Per capita retail space overall has more than doubled in the last 10 years, even though the number of new adult consumers is growing much more slowly than in earlier decades. As Henry J. Singer, vice-president for area management and sales at General Electric Co. puts it: "It's not like we sat here and said, 'Let's change the way we sell.' We had no choice."

`KEY DIMENSION.' Many companies also see selling and service as the latest and best arena for capturing customers. The battles of the 1980s--high quality and low cost--have already been waged and largely decided. "These days, the product has to be great just to be in the game," notes Richard A. Smith, general manager for North American operations for Learning International, a leading sales training firm. So the next place to compete is in sales and customer service. The consulting firm Bain & Co. has developed research showing that boosting a company's customer-retention rate 2% has the same effect on profits as cutting costs by 10%. As Linda Kane, director for development at Stride Rite Corp., puts it, "What the customer expects has taken on a key dimension."

As they look for that selling advantage, leading-edge companies are finding several rules that hold true for practically every business:

Smart selling requires focusing the entire organization, from manufacturing to finance, on sales and customer service. Du Pont Co. spent the 1980s cultivating flexible sales teams recruited from all executive ranks to develop and sell new products. In 1990, a team of chemists, sales and marketing executives, and regulatory specialists noted that corn growers needed a herbicide they could apply less often, and created a product that topped $57 million in sales its first year.

Smart selling needs the involvement and attention of top management. Bernard Marcus and Arthur Blank, founders of retailer Home Depot, helped prepare their sales training program. At Cincinnati's Fifth Third Bancorp, CEO George A. Schaefer Jr. regularly calls on customers.

Smart selling means building relationships with customers, not just slam-dunking them on a single sale. GE has engineers stationed full-time at Praxair Inc. to help boost productivity at the maker of industrial gases, which uses GE-built electrical equipment. Says GE's Singer: "Customers demand a new intimacy."

Smart selling uses salespeople to solve customers' problems, not just take their orders. Kraft U.S. A.'s sales reps no longer limit their efforts to devising promotions in supermarkets: Now they offer research and tips for improving a store's profits.

As companies grow obsessed with customers, how they train salespeople is becoming increasingly important. Firms such as Learning International and Acclivus, a Dallas firm that trains sales personnel for major corporations, report increasing sales and an emphasis on new approaches, such as teaching team-selling or ways to develop long-term relationships with customers.

Important as training is, compensation may be the thorniest issue in remaking a sales force. As Sears' car-repair woes demonstrate, traditional commission-based systems can encourage the sort of short-term sales approach that tarnishes a company's image. "People behave as they are measured," says Steven Gross, a compensation consultant at Hay Group Inc. That's why the most innovative companies are experimenting with compensation structures that reward salespeople for thinking long-term and working to retain customers. "The No. 1 trend in sales compensation is building customer satisfaction into pay plans," says Craig Ulrich, principal with consultants William & Mercer.

GE, for example, is testing the use of customer-satisfaction surveys as a factor in sales compensation. To set bonuses for everyone from 800-line phone operators to its president, American Telephone & Telegraph Co.'s Universal credit card unit has an in-house staff monitor customer satisfaction. Sears says it will now build such measures into its Auto Center pay plans.

In some units, such as its power-generation business, GE now proffers team-based bonuses and rewards to get salespeople to think collectively about providing service. Some car dealers have replaced commissioned salespeople with salaried employees who sell cars at fixed prices. Home Depot avoids commissions, relying instead on employee stock ownership plans and a liberal dispensation of stock options.

For many business-to-business vendors, their products and services are now so complicated that the best thing they can offer is a way to make life simpler. Take AMP Inc. in Harrisburg, Pa., the No. 1 producer of electrical connectors, with $3 billion in sales. Jim Wolowicz, an AMP engineer, sold connectors to makers of copiers, personal computers, and telephones. Problem was, Wolowicz had a hellish time getting quick access to essential product specifications and performance data on AMP's 70,000 individual products. "If I was having this much trouble, what were our customers going through?" Wolowicz says.

GETTING DEEP. So AMP has started an ambitious project to record all product data on convenient CD-ROM disks that engineers can scan instantly. Early response to the first batch of disks has been enthusiastic. Says William Blanford, an operations manager in Motorola Inc.'s two-way radio business, "This way is faster, better, and cheaper."

Business customers also want sellers who can forge deep relationships, in part because of the intense pressure to form partnerships with their own customers. Geoffrey B. Bloom is president of Wolverine World Wide, a $314 million marketer of footwear. For him, selling even to satisfied clients like J.C. Penney Co. is daunting: "They want resupply in 24 hours, they want computer linkups, they want sophisticated financial analysis of our product's potential." So when a supplier's salesman pitches him, Bloom demands a computer linkup and just-in-time delivery, too: "That's what I have to do to be viable."

Companies had better figure out how to satisfy the likes of Bloom. Today's smarter, tougher, more demanding customer has less patience than ever for the hard sell--and more opportunities to take his or her business elsewhere. But fashioning a better approach to selling is a complex and sometimes frustrating task. Here's a look at how some companies in a broad range of businesses are trying to master that process.

Before it's here, it's on the Bloomberg Terminal.