Week 45 – Strategy – Chapter 12
In what business fields are you successful? What type of customer relationship is particularly fruitful? Where are your best customers in terms of know-how and their willingness to switch providers? These are the questions that we will consider, because they are helpful in questioning and improving your sales strategy. Keyword: Market play.
I heard about Peter Grimm and his concept of market play for the first time in 1996—and I was impressed. Why? Because he was able to explain something as complex as the market in simple terms.
The model has two axes. The horizontal axis shows the know-how of the customer. On the left you’ll find the customers who know what they want and can assess the market offers by themselves. On the right you have customers who can describe their problem, but not their solution, and cannot judge the quality of the offer.
The vertical axis indicates the interchangeability of the service provider or the willingness of the customer to switch providers. At the top you have customers who have a low willingness to switch providers and wish to maintain a long-term and intensive business relationship. At the bottom are the customer relationships characterized by high arbitrariness and low loyalty.
Here are the four business fields:
Selling on a Simple Model
At the bottom left-hand corner you’ll find high interchangeability combined with considerable customer know-how. Those are business fields in which the customer knows exactly what she wants and can get it by alternating providers. This is characterized by clear requirements and several providers who can meet these requirements. In the consumer goods field, this would include discount chains such as Aldi or Wal-Mart.
At the top left-hand corner you get close business relationships combined with considerable customer know-how. The customer knows exactly what he wants and will get, but in contrast to the earlier field, there is a strong loyalty to one or a small number of providers. This field includes emotionally charged brands like Apple, and preferences like a favorite hotel or the local bar.
On the bottom right, low customer know-how merges with high interchangeability. In this business field there are fleeting customer relationships, that are more often characterized by emotionally intuitive purchasing decisions. Cell phone providers such as Vodafone and T-Mobile would be typical examples. Or businesses centered on door-to-door sales, in which the customer makes decisions quickly and without much information.
On the top right-hand corner is a field defined by extensive consulting and intensive support. It is characterized by long-term collaborations between provider and client. The clients bring little know-how to the table and are not able to solve their problem alone. These range from consumer businesses like kitchen installations to complex business software or the hiring of a management consultant.
The lesson here: The customers’ selection parameters determine the business field.
Ask yourself this: In what business fields are you currently successful? What type of customer relationships are particularly fruitful? Where are your best customers in terms of know-how and their willingness to switch providers? Do they have considerable market knowledge or not much? Can the customers define what they need or do they require assistance? How loyal are your customers?
This much is clear: The customers in the four categories face very different decisions. Every business field demands different sales approaches.
Which one of these fields do you seek to cover in the future? In how many of these can you be successful without spreading yourself too thin or losing credibility in the eyes of your clients?
Where is the dividing line between, for instance, relationship-oriented sales and consulting-oriented sales? I admit that it isn’t always clear. The two overlap and invariably have points in common.
Companies that want to focus on these two fields specialize in clients with scant willingness to switch providers—regardless of how much know-how they possess. The challenge for the sales professional consists in knowing when consulting is necessary for finding a solution, as opposed to when emotional validation and personal recognition is what a purchasing decision calls for.
Another example would be the combination of consulting-orientation and closing-orientation. Here the priority is dealing with clients who possess little know-how—regardless of their willingness to switch providers. The focus in this case is on innovation. Whenever companies target this combination, the sales professional must take care to adjust her approach according to the scale of the decision. If the volume is small, a quicker decision is preferable; for more complex orders it is vital to work toward solutions together with the client.
The combination of the simple model and the closing-orientated sale is one that will most often be found in companies that are geographically removed from their clients and use the telephone or the Internet to contact them. Here the company’s focus will be to ensure a relatively smooth transaction for the client on the bottom left-hand side. In addition, clients must be put in a position to make decisions.
In the fourth combination on the left side of the matrix, there is a combination of two business fields that both have considerable know-how at their disposal. Here one aims for clearly defined products, personal relationships or price advantages.
How does it look in your business? I urge you to run through this system yourself.