Why Solution Sales is Fading Away

For the past twenty or so years, many companies have pursued a solution sales strategy. However, a growing number have found this approach to be unsustainable.

This article will explain why solution sales was developed and its limitations, the reason for its demise, and finally how to thrive in the post-solution sales environment.

How Solution Sales Became Our Reality

There are two primary reasons why solution sales came about.

First, in order to prevent the commoditization of our products and services, we proactively sought to address larger and more complex needs with customers. That way, we could sell larger deals and maintain or grow margins.

Second, our customers pulled us in this direction. Companies in the mid-1990s began to downsize and shed capabilities that they felt they could more effectively and economically buy in the marketplace. As a result, our customers became increasingly reliant upon their suppliers’ expertise.

The Limits of the Solution Sales Model

When companies began developing and executing a solution sales approach, sales leaders realized that this approach faced three major constraints:

1) Limit on customers’ time—the amount of time needed from the customer during the sales process grew dramatically. This led to what is commonly known now as “solutions fatigue,” with customer stakeholders increasingly intolerant of long, drawn out open-ended needs analysis meetings.

(For your key accounts, this type of commitment is still necessary and even suggested. See how Cargill developed a structured approach to their customer-facing planning meetings.)

2) Limit on the capabilities of the sales force to execute—solution sales required a new set of skills; foremost the ability, in the moment, to diagnose deeper, more complex customer problems and to develop customized solutions to address them. The result of this is what you see in the Figure below, which compares sales force performance in a low-complexity environment (left) with performance in a solution sales environment (right). Here you see that the gap between high-performing and core-performing reps widens dramatically when moving to a solution sales model, where a shrinking percentage of the sales force hits their goal.

3) Limit on the abilities of the organization to deliver—lastly, allowing a sales rep to create customized solutions for individual customers erodes margin and puts severe strain on the production side of the company. The result is lower profitability and dissatisfied customers—the direct opposite of the intent of solution sales.

Reasons for Demise

In addition to these limitations, two new customer-oriented dynamics are in play that, when put together, eliminate the solution sales approach.

1) Customer access to supplier information—with the rise of the internet, as well as the ability to connect via social media, customers have the ability to learn more on their own. In fact, they’re now able to access information that they used to rely on our sales people for.

2) Professionalization of Procurement—procurement is rapidly developing from a cost-cutting function, to a value-creation one. While that is a good thing for sales, procurement is now actively trying to disintermediate the customer-supplier relationship. In other words, they want to break the relationships that their company has with suppliers to ensure that their company is getting the best value in the marketplace.

How to Thrive in the Post-Solution Sales Environment

It’s ok to develop complex solutions to offer customers. In fact, it’s the best way to grow business with customers in a sustainable, profitable way. However, they need to be sold in the right way.

When we analyzed 5000 B2B customers, we found the single biggest opportunity we have is using the sales moment not to diagnose, but to teach customers something new about their business, and ways in which we can uniquely help them. It’s a much more proactive, customer-friendly approach that, if done correctly, leads the customer to the solutions only you can offer.

Instead of relying upon the sales force to execute on this alone, I see sales, marketing, product and other functions joining forces at leading companies to build these insights. These groups need to collaborate in order to build messages for sales people to use, that get customers to think differently about the unique components of your offerings.

Concluding thoughts

Solution sales has come and gone. Now companies need to enable their reps and account managers to sell these complex solutions differently, more effectively—the way, frankly, that customers want to buy.  The good news here is that getting this right means you’re going to make it easier for your reps, not harder, even if your products and solutions are getting more complex.

SEC Members, visit the Challenger Selling topic center to learn more about how to lead with insight and challenge customer assumptions. Also read the Ten Trends Every Sales Exec Must Know For 2013.