SELLING WITHOUT SELLING – THE McKINSEY WAY
Selling without Selling – The McKinsey Way
Would you believe that the one firm that ought to know something
about consultative selling to clients is the very one that forbids its
senior executives (partners) from using the word “sell” in their
vocabulary? “Never sell anything! Do you know of even one
salesman that you ever trusted?” asked one McKinsey veteran of a
class of aspiring junior partners. The primal goal of a McKinsey
partner is to become the trusted counselor to a handful of senior
executives at the Fortune 500 companies and let the rest, namely
sales, follow. It is hardly surprising that partners often forget to bill
their clients in time, much to the chagrin of the bean counters at the
firm.
Companies across industries, from manufacturing to professional
services, are finding that old school tactics of calling on customers
programmatically, “wining and dining” them and cutting “special”
deals, are not working. This has led many to direct their frontline
sales staff to migrate from transactional to consultative selling. Yet,
most of these efforts quickly degenerate into a re-cycling canned
value selling courses, with little to show for it.
It is remarkable that McKinsey, which routinely sells $10 million plus
engagements to companies, in a good and bad economy, virtually
never pays for any meals for its clients, regularly raises its rates every
year and rarely cuts discounts. The
same small project that cost $400,000
fifteen years back today may cost over
$1.6 million. Yet, clients keep coming
back for more.
How can McKinsey be so successful?
What lessons can non-consulting
companies learn from McKinsey about
consultative selling? Here are some:
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Worry about the makings of a sale, not making the sale
McKinsey partners are not compensated based on the amount of
business they sell. Instead, their performance is assessed rigorously
on the factors that result in sales, for example: Is the partner serving
the top 2-3 companies in his industry? Is the McKinsey work
transformative and high impact? Is the partner “collegial,” building
opportunities not only himself, but also other McKinsey partners to
serve at his clients? Is his expertise recognized broadly in the
industry? In reality, unless a McKinsey partner serves some of the
premier companies in his focus industry with large engagements that
cut across business units and functions, he is unlikely to score well on
his personal performance factors. And if he does succeed on those
metrics, there is little doubt that he will bring in the requisite
revenues to the firm.
This approach should raise questions for even non-consulting
companies. Does your company understand exactly the 4-5 factors
that drive success? Would it feel confident compensating its sales
reps on their performance on those factors rather than actual sales?
Is any revenue and any client good enough or do some matter more
than others?
Set a true north around customer impact
McKinsey partners are trained to obsess over
delivering measurable impact on the client’s
performance. After all, even a small McKinsey team
may cost clients, $500,000 per month or $25,000
per day. Hence, the one daily question that every
McKinsey partner must objectively answer to
himself is “So what value did we add today?”
In the world of corporate intrigue, senior executives
come and go, but McKinsey usually stays. This is because McKinsey
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relationships are not based on pressing flesh. When others are vying
to become golf buddies with their clients, McKinsey partners are
locking themselves in little dark rooms with their teams, figuring out
new ways to add value for their client’s business. So even when
executives churn, McKinsey can point to the history of the value it has
added and its roadmap for adding more in the future. What new CEO
would not want “shovel ready” projects for delivering results early?
The focus on client impact is real. As part of what are known as “Ten
Thousand Mile Checkups,” a McKinsey partner from Client X will be
invited to audit the work done by another partner’s teams at Client Y.
This ensures that the team is not living in a dream but adding
verifiable value.
So as you read this article today, ask yourself, what value did your
sales team add for your customers today? How often do you have an
account leader for one customer objectively audit the performance of
another account at a different customer? Such cross-team
performance audits are not the same as lame and gamed customer
satisfaction surveys. They are conducted by the pros in your business,
who can smoke out what is working and not.
Be seriously interesting
McKinsey partners routinely dispense advice under circumstances
where the client knows more about its own business and industry.
The essence of being a great consultant is to have something
thoughtful to say in every meeting with the client. This involves
looking asymmetrically across industries, being serious minded
contrarians, confronting the improbable, etc. “If I didn’t make the
client feel just a little uncomfortable, I am probably not pushing the
thinking enough,” says one seasoned hand.
As a counselor, you want to get to a point where the client when
faced with a challenging issue says, “I wonder what my McKinsey
friend would make of this.” That is when you transition from being
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SELLING WITHOUT SELLING – THE McKINSEY WAY
simply a trusted confidante to a trusted counselor. A more
philosophical minded McKinsey partner once mused, “Ultimately, this
is all about how you will stay interesting in life, about why anyone,
anywhere will care to listen to what you have to say.” Behind the
scenes, McKinsey as an institution does a lot of research into
industries and clients in order to stay one step ahead of the emerging
issues. But ultimately, the test of remaining intellectually interesting
is non-formulaic and many fail at it.
In your company, how many customers pick up the phone and call you
first when they have an issue – whether or not it relates to your
products? When was the last time that you told your client
something that made them think differently about their business?
What investments are you making in understanding the challenges
that your clients face ahead of time?
Hunt in packs
For every client of interest, and not all are, McKinsey partners
institute a Client Service Team (CST). Consultants in the CST commit
to serving the target client with missionary zeal. In turn, partners in
the CST commit to shepherding those consultants through their
careers. The CST meets regularly, researching opportunities to add
value through new projects and assigning individual consultants to
develop close-in relationships with specific managers. In major client
meeting, expect to see the senior leaders of the pack. This is in
marked contrast to other service firms where lone wolf partners, not
packs, guard their turfs.
To learn how pack hunters work, flip to the Discovery channel. Some
parts of the pack lay the ground in advance of the hunt; some listen,
some deflect, some probe, some engage and some simply learn to
hunt. Having multiple partners in the room with the client
accomplishes a lot – two people with differing expertise can identify a
broader spectrum of opportunities and are more credible. After all
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how can one person be both a branding guru and an operations wiz?
More chances at engagements and more relationships at work,
equate with durable and high impact client partnerships.
In your company, do your field reps hunt in packs or as lone wolfs?
Who does what in the pack, before, during and after customer
meetings? Does the pack protect its own? Do team members make a
social contract to help each other? Are your client relationships
enmeshed across multiple decision makers at the customer?
Wear your values on your sleeve
You cannot establish deep trust with your client without having clearly
defined values and sharing them with your clients. Do you trust
anyone whose values you do not know? McKinsey partners have
values that are on display and communicated all of the time to their
clients. Among them are a credo of living up to “a duty to dissent,”
putting client interests ahead of McKinsey’s interests, and never lying
to a client or ever betraying their confidentiality. McKinsey often
faces difficult choices, when say a client’s pet project is a bad idea
that must be cancelled, or a client offers a lucrative project that
McKinsey knows would be better pursued internally by the client. On
such occasions, the best partners use this values compass to arbitrate
the right course of actions. In the long term, it makes for building
strong relationships.
What would field reps say are the values of your company? How do
these values tie explicitly into building customer relationships? What
stories can you tell? What would customers say are the values of your
company?
Care about your client (really)
The best McKinsey partners have a passion for personally seeing their
clients succeed professionally. This is real work, performed often
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SELLING WITHOUT SELLING – THE McKINSEY WAY
without compensation, in spirit of professional kinship. “I knew my
client was going to be taken to task by the CEO for missing his
quarterly numbers, so I yanked my team off their regular engagement
to quickly build some contingency plans. The client survived and was
forever grateful.” Another partner cited an instance when his client
was interviewing for a leadership position at another company and he
arranged for him to receive personal coaching from several of his
colleagues at McKinsey that served that company or were otherwise
experts in that industry. “Here’s the thing though. You must pick
clients that you really like, because you can’t fake this for long.”
How do sales executives at your company think of “professional
kinship” with the customer executives they serve? How do they seek
out opportunities to help their customers outside of the tour of duty?
What resources does your company offer to help its customers
succeed?
***
The McKinsey way was architected over years of self-reflection on
what works and does not. This introspective is institutionalized with
training programs, apprenticeship and a celebration of professional
values. For companies, that wish to become the premier counselors
to their customers, building their own system is the key.
If you would like to discuss how your company can build intense
customer relationships, please reach out directly to our managing
director at sandeep.dayal@cerenti.com.
©Cerenti QuickShot, Vol 15, August 5, 2013