Taming Sales

Complexity

Making It Easier
for Customers to Buy
Annual Executive Retreat
3 June 2015
Chicago

CEB Sales Leadership Council

A Framework for Member Conversations
The mission of The Corporate Executive Board Company (CEB) and its affiliates is to unlock the potential of organizations and leaders by advancing the science and practice of management.
When we bring leaders together, it is crucial that our discussions neither restrict competition nor improperly share inside information. All other conversations are welcomed and encouraged.

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Legal Caveat
CEB is not able to guarantee the accuracy of the information or analysis contained in these materials. Furthermore, CEB is not engaged in rendering legal, accounting, or any other
professional services. CEB specifically disclaims liability for any damages, claims, or losses that may arise from a) any errors or omissions in these materials, whether caused by CEB or its
sources, or b) reliance upon any recommendation made by CEB.
Sellers today struggle to
cope with an increasingly
SHIFTING BUYING DYNAMICS
complex sales environment.
Drivers of Changing Customer Buying Behaviors
■■ Increased information, people,
and options are placing More Information More People More Options
new demands on already
overburdened sellers.  High quality information  Customer risk aversion  Technological capabilities

 Third-party consultants  Solution complexity  Competitor capabilities

 Strategic sourcing  Global teams  Disruptive alternatives

 Matrixed structures

Source: CEB analysis.

Q: “How Complex Do You Think Your Job Is as a Seller Q: “Please Describe What You View as the Most
Today?” Complex Aspects of Working with Customers.”
(Selected Responses)

“Easily the biggest

29.8% challenge is the wealth of
Somewhat to information now available
Not Complex
through the Internet.”

70.2%
Moderately to “Getting them to focus on
Highly Complex a single issue while being
bombarded daily by salespeople
with different solutions.”
n = 1,010.
Source: CEB 2015 Sales Complexity Assessment. Source: CEB 2015 Sales Complexity Assessment.

© 2015 CEB. All rights reserved. SEC2650915SYN

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Faced with highly complex
purchases, customers are
MORE DEMANDING CUSTOMERS
increasingly placing more
demands on suppliers. Customer Demands Due to More Information, People, and Options

■■ Customers have access to

more information, involve
diverse stakeholders, and Customer Behavior Group Discussion
have more options to consider
along the purchase process.
1. Which of the customer demands on the left
■■ As such, customers have 1. Customers demand more information is placing the greatest burden on your sales
greater and more varied throughout their purchase team?
needs than ever before.

2. Diverse stakeholders require offerings that

meet varied business needs
2. How are these demands impacting the sale?

3. Customers frequently re-evaluate options and

alternatives

3. What’s your strategy for addressing these

increasing demand?

4. Diverse stakeholders raise numerous questions

and requests

Demanding Customers

Source: CEB analysis.

© 2015 CEB. All rights reserved. SEC2650915SYN

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Suppliers are adopting
a responsive approach
CUSTOMER-CENTERED SELLING
to meet the ever-evolving
needs of more demanding Supplier Responses to More Information, People, and Options
customers.

■■ Greater and more varied

customer needs are forcing Customer Behavior Supplier Response
suppliers to assume a
responsive posture and
accommodate customers’
evolving needs. 1. Customers demand more information 1. Provide more information throughout the
throughout their purchase purchase process
■■ This commonly manifests
as suppliers providing more
information, adjusting offerings
to evolving customer demands,
2. Customize offering to meet multiple
and responding promptly to 2. Diverse stakeholders require offerings
customer stakeholders’ needs and
customer queries and concerns. that meet varied business needs
priorities

3. Customers frequently re-evaluate options 3. Frequently adjust the scope of solution

and alternatives to meet evolving customer needs

4. Diverse stakeholders raise numerous 4. Respond promptly to various questions

questions and requests and requests

Demanding Customers Responsive Suppliers

Source: CEB analysis.

© 2015 CEB. All rights reserved. SEC2650915SYN

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The majority of sellers
today adopt a responsive
BEING RESPONSIVE IS PERVASIVE
approach with customers.
Seller Agreement with Each Statement
■■ Sellers believe that using a
responsive approach, such as
providing more information and
options, helps customers make
better decisions.
32%
Disagree “More information generally helps customers make better
■■ A responsive approach is seen 68%
by sellers as a commercial Agree decisions.”
advantage that helps
distinguish them from the
competition.

21%
Disagree “I remain very flexible to customer needs and opinions
79% throughout a sale, even when I don’t necessarily agree with
Agree their direction.”

14%
Disagree
“Helping the customer consider all possible options and
86%
Agree alternatives is very important.”

n = 1,010.
Source: CEB 2015 Sales Complexity Assessment.

© 2015 CEB. All rights reserved. SEC2650915SYN

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CEB Sales conducted
extensive research
HOW TO SELL TO MORE DEMANDING CUSTOMERS
to uncover effective
commercial strategies when Research Components
selling to more demanding
customers. Structured Research Interviews Sales Complexity Assessment Global Customer Panel Survey
■■ 65 companies ■■ 1,000+ B2B sellers ■■ 600+ B2B customers across
■■ Three unique research industries
components captured
■■ 60–90 minute interviews ■■ 13 industry verticals
customer, seller, and sales
■■ North America, Europe, Asia-
■■ Senior leaders, and front line sales ■■ Assessed seller actions, job
leader actions. Pacific, Australia
professionals and managers complexity, perceptions of
customer purchase behavior, etc. ■■ Assessed customer sentiment
■■ The sample is representative towards purchase, seller actions,
of all major industries and buying group dynamics, etc.
geographies.

■■ The use of control variables and

rigorous data analysis ensured
data validity.
Partial List of Participating Member Companies

Source: CEB analysis.

© 2015 CEB. All rights reserved. SEC2650915SYN

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Three critical questions
frame our discussion.
PUTTING YOURSELF IN THE CUSTOMER’S SHOES

Think about the last significant purchase you were involved in at your organization.

1. Who was involved in making the decision?

2. How did it go? What was the hardest part about that experience?

3. How do you feel about the outcome?

Source: CEB analysis.

© 2015 CEB. All rights reserved. SEC2650915SYN

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Customers must account for
multiple considerations to
SO MANY CONSIDERATIONS
complete a purchase.
Partial List of Customer Purchase Considerations
■■ This is a partial list of some
of the many considerations
customers go through in the
purchase process.

■■ Such considerations are

increasingly challenging
given customer consensus How much should we
requirements, added diversity What is the problem? spend?
of stakeholders, and added
business complexity.
What criteria matter? Which supplier?

Purchase Process

Who’s going to be Should we issue an

involved? RFP?

What is the How do we evaluate the

solution? offerings?

Source: CEB analysis.

© 2015 CEB. All rights reserved. SEC2650915SYN

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More information, people,
and options strain
TOO MUCH OF A GOOD THING
customer’s ability to make
decisions. Drawbacks of More Information, People, and Options

■■ As customers learn more, their

natural desire to learn even
more increases.
■■ Triggers search for yet more
■■ Highly diverse customer information
Too Much
stakeholders, with equally
Information ■■ Magnifies the perceived risks, stakes,
diverse goals and interests,
struggle to find commonalities and importance of the decision
for evaluating a purchase and
often settle for “good enough.”

■■ As choice set expands,

customers feel overwhelmed
about the opportunity cost of
solutions they are unlikely to
choose. ■■ Raises need for and difficulty of
■■ Further, large choice sets Too Many consensus
heighten customer expectation People ■■ Encourages “lowest common
for finding an ideal solution. denominator” decision making

■■ These trends, common in

consumer purchasing, are
quickly encroaching into B2B
purchasing.

? ■■ Raises opportunity cost

Too Many of making a decision
Options ■■ Heightens expectations
for finding an ideal solution

Source: CEB analysis.

© 2015 CEB. All rights reserved. SEC2650915SYN

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Increased information,
people, and options result
PENALTY 1: EXTENDED BUYING CYCLES
in longer than expected
buying cycles. Buying Cycle Length Relative to Customer Expectations

■■ Overabundance of information,
people, and options have a 90.0% 84.0%

Percent of Customers
direct impact on sales cycle
length. CEB data finds:
–– 80 percent of customers
45.0%
report learning new
information throughout the
purchase. 6.5% 9.5%
–– 46 percent of customers 0.0%
Shorter Than As Expected Longer Than
encounter conflicting
Expected


Expected
information as part of the
purchase process. n = 610.
Source: CEB 2015 Sales Customer Panel Survey.
–– 69 percent of customers
consider large number
of different offerings and
options.

Buying Cycle Length, Expected versus Actual

As Reported by Customers

Actual Purchase Length = 97% Longer

Customer’s Expected Purchase Length

Customer’s Actual Purchase Length

Beginning of Purchase
Purchase Decision

n = 610.
Source: CEB 2015 Sales Customer Panel Survey.

© 2015 CEB. All rights reserved. SEC2650915SYN

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Overwhelmed customers are
more likely to experience
PENALTY 2: PURCHASE REGRET
purchase regret.
Impact of Overwhelming Purchase Experience on Purchase Regret
■■ More information, people,
and options, result in an Overwhelming Purchase Experience
7
overwhelming purchase ■■ Struggled to identify next steps
experience for customers. ■■ Group had a difficult time making decisions

Purchase Regret
■■ Excessively long
5
■■ The more overwhelming the ■■ Presence of stall points/delays
purchase, the more likely the
customer is to experience Purchase Regret
3
purchase regret. ■■ Purchase failed to meet our expectations
■■ Purchased less comprehensive solution than we should have
■■ The presence of delays
■■ Ultimately regretted making this purchase
in decision-making, struggling 1
to determine next steps, 1 3


5 7
and difficulty in making Overwhelming Purchase Experience
decisions are all indicative
of overwhelmed customers. n = 610.
Source: CEB 2015 Sales Customer Panel Survey.

■■ Purchase regret drives

negative advocacy for the
supplier in the short-term,
and reduces customer loyalty Impact of Purchase Regret on Customer Loyalty Impact of Purchase Regret on Negative
in the long-term. Indexed Customer Advocacy
Indexed

1.00x
1.00 1.53x
1.53
0.86x
0.86
1.00x
1.00

Low
Purchase Regret


High
Purchase Regret
Low
Purchase Regret


High
Purchase Regret

n = 610. n = 610.
Source: CEB 2015 Sales Customer Panel Survey. Source: CEB 2015 Sales Customer Panel Survey.

© 2015 CEB. All rights reserved. SEC2650915SYN

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Simplifying the purchase
experience has a dramatic
MAKE IT EASIER
impact on supplier ability to
close a high quality sale. Impact of Purchase Ease a on Supplier’s Likelihood of Making a High-Quality Sale b
Indexed

■■ Purchase ease is not denoted

as making it easy for customers
to transact with a supplier (i.e., 1.80
streamlining the contracting 1.62x
1.62
process, reducing time to
obtain various approvals, etc.).

■■ Rather, purchase ease reflects

a supplier’s ability to guide
customer decision making, 1.00x
1.00
pathing customers through how
to make a purchase decision. 0.90

0.00
Low Purchase Ease

High Purchase Ease

n = 610.
Source: CEB 2015 Sales Customer Panel Survey.
a
Purchase Ease is defined as “supplier made it easy for my organization to make this purchase.”
b
High-Quality Sale is defined as increase in chance of being selected as a winning supplier and the customer
1) did not settle for less ambitious solution, or 2) purchased a premium offering relative to the base offering.
Note: Customer data controlled for brand, customer service, price/value ratio, and features and benefits.

© 2015 CEB. All rights reserved. SEC2650915SYN

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There are two dominant
approaches to help
TWO DOMINANT APPROACHES
customers buy—responsive
and prescriptive. Factor Analysis of Sales Approaches

■■ A responsive approach focuses

on providing customers with
information and options, Customer
continually adjusting to better Survey
meet evolving customer Responses
demands.

■■ A prescriptive approach
narrows a customer’s choice
Factor
set and deliberately paths them Assesses naturally co-presenting
behaviors, in this case, commercial Analysis
through their purchase decision.
approaches.
■■ These approaches are assessed
with factor analysis, which
determines natural groupings
of commercial approaches that
■■ Focused on solving multiple business needs ■■ Presented a clear offering
customers perceive. ■■ Directed us to abundance of information ■■ Gave us a clear, concise rationale for
recommendations
■■ Encouraged us to defer discussion of contentious
issues ■■ Explained complex aspects very clearly
■■ Provided us with many alternatives ■■ Always prepared and one step ahead of us
■■ Continuously adjusted the offering through the ■■ Settled internal debate
process ■■ Encouraged us to discuss contentious decisions

Responsive Approach Prescriptive Approach

n = 610.
Source: CEB 2015 Sales Customer Panel Survey.

© 2015 CEB. All rights reserved. SEC2650915SYN

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Employing a prescriptive
approach increases
THE PROMISE OF PRESCRIPTION
purchase ease and reduces
regret for customers.
Change in Likelihood of Experiencing Purchase Change in Likelihood of Experiencing Purchase
■■ A prescriptive and responsive Ease a Regret b
approach lead to dramatically
different purchase ease and
regret outcomes. 100% 100%
86%
■■ While sellers are more likely to
adopt a responsive approach, a
prescriptive approach increases 50%
likelihood of positive deal
outcomes.
Responsive Prescriptive
Approach Approach
0% 0%
Prescriptive Responsive
Approach Approach
(18%)

(37%)

(100%) (100%)

n = 610.


n = 610.



Source: CEB 2015 Sales Customer Panel Survey. Source: CEB 2015 Sales Customer Panel Survey.
a
Purchase Ease is defined as “supplier made it easy for my organization to make b
Purchase Regret is defined as offering purchased did not address buyers’
this purchase.” business needs, buyers purchased less comprehensive solution, and buyers
ultimately regretted making this purchase.

© 2015 CEB. All rights reserved. SEC2650915SYN

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Suppliers have numerous
opportunities to be
MOMENTS FOR PRESCRIPTION
prescriptive across the
buying process.
Definition of Prescription
■■ Customers must successfully
A credible and influential set of “do this”/“don’t do that” recommendations, provided to customers across the
make a multitude of decisions in
purchase process, deliberately intended to ease the customer’s movement toward purchase.
order to complete a purchase.

■■ Suppliers are inherently best

positioned to path customers
through these different
considerations given their
Sample Opportunities for Prescription Based on Customer Purchase Considerations
experience in working with
similar customers making
similar decisions day-in and
day-out.
Problem Solution Supplier
■■ Highlighting these decisions
and guiding the customer
through these moments makes ■■ Deciding who to involve ■■ Deciding which information to ■■ Deciding whether further
it easier for customers to buy. and why consult learning is needed
■■ Deciding which problem ■■ Deciding on budget ■■ Deciding to issue RFP or not
to address ■■ Deciding what criteria matter ■■ Deciding which supplier is best
■■ Deciding whether to pursue a
purchase or other priorities

Source: CEB analysis.

© 2015 CEB. All rights reserved. SEC2650915SYN

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Customers report sellers
having a limited influence on
SELLER INFLUENCE ON PURCHASE DECISION
their decisions spanning the
purchase process. Q: “What did the sellers you interacted with do to influence the decisions you made throughout
your purchase process?”
■■ Customers view interactions
with sellers as primarily focused
on product and price.

■■ Sellers should focus on

providing customers with
prescriptive recommendations
on how to progress through the
purchase.

n = 610.
Source: CEB 2015 Customer Panel Survey.

© 2015 CEB. All rights reserved. SEC2650915SYN

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ROADMAP FOR THE PRESENTATION

1 2
How to Operationalize Prescription? How to Enable Prescription Through Different Commercial Channels?

A.N.
a

Mobility Seller Channel Customer Channel Content Channel

Solutions

Customer Roadblock Resolution Process

MDH Systems
a

Prioritization Assessment Peer-to-Peer Prescription Buying Simplification Content

Customer Purchase Accelerator Tool

a
Pseudonym.

© 2015 CEB. All rights reserved. SEC2650915SYN

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