Consultative selling is a sales approach favoring relationship building and open dialogue to meet a prospective customer’s needs adequately. By building trust quickly, a consultative selling approach can help the customer better meet her/his expectations, and the salesperson hits her/his targets more effectively.
Understanding consultative selling
Spoilt for choice and with high expectations, modern consumers and businesses are extremely sensitive to traditional marketing and sales tactics.
This is particularly evident when they feel pressured to buy something from an aggressive sales representative determined to make a commission.
Consultative selling focuses on the experience or interaction a potential customer has with an organization.
It is solution-based, customer-centric, and prioritizes the formation of solid relationships.
Company representatives act more like advisors than salespeople, recommending value-providing solutions tailored to the customer’s individual needs.
Trust is about competence
This can radically improve the chances of closing a sale and speed up building trust between the potential customer and the salesperson.
The salesperson that uses the consultative approach is aware that to build trust with the customer, rather than trying to be pushy, she/he needs to build a solid competence around the product.
This is a critical step to serve the potential customer properly.
The consultative approach transforms the salesperson into an engineer with the sensibility of a potential customer
So much so to be able to interface with the product and engineering team, to understand all the facets of the product and how they can serve the customer.
Only, in that case the salesperson becomes truly useful to the potential customer, as she/he understands in the first place how the product can be applied to the potential customer’s business.
And the salesperson becomes a sort of analyst able to provide key business insights to the potential customer.
When the potential customer grasps the ability of the salesperson to provide insights for the business and identify opportunities, this makes the whole sales process way smoother.
The five steps of consultative selling
There are five steps, or guiding principles, to consultative selling:
1 – Ask the right questions
Here, the business must diagnose the root cause of a problem by asking the right questions.
Open-ended questions that avoid “yes” or “no” answers encourage the lead to volunteer information themselves, which increases trust and mutual understanding.
In the B2B space, it can be helpful to peruse the company’s social pages and website to get an idea of its size, approximate turnover, core product offering, and target market.
It’s also important to determine how much the customer has budgeted for a solution to avoid any unwelcome surprises later.
The more you move from consumers to enterprise clients, the more you’ll need a sales force able to manage complex sales. As a rule of thumb, a more expensive product, in B2B or Enterprise, will require an organizational structure around sales. An inexpensive product to be offered to consumers will leverage marketing.
For that, the salesperson needs to identify early whether the customer is on target with the product.
Imagine, for instance, the case of a company offering an enterprise product that works well for larger organizations.
This solution might not be in target for the customer, and this might hamper the whole sales process, thus wasting the time of both the potential customer and salesperson.
2 – Listen actively
Customers are always aware of their own problems, but many believe they need one solution when they need something else entirely.
Active listening helps the business read between the lines, as it were. To listen actively, the advisor needs to spend 80% of the time listening and 20% speaking.
Active listening is the process of listening attentively while someone speaks and displaying understanding through verbal and non-verbal techniques. Active listening is a fundamental part of good communication, fostering a positive connection and building trust between individuals.
This allows them to pay attention to verbal and non-verbal cues, which provide essential insights into their motivations for buying.
Ultimately, these motivations are based on pain points, which are based on emotions not always communicated in words.
3 – Educate
In consultative selling, education means teaching a lead how to make an educated decision.
Always assume the lead has done their research and requires help implementing what they already know.
Education can take the form of related case studies from previous clients.
Alternatively, it may incorporate a well-presented plan for addressing the problem supported by factual evidence.
In any case, it is important to balance helpfulness with oversharing to avoid giving the lead everything they need for free.
When it comes to enterprise clients, it’s critical to find the sweet spot between what can be offered as a free service to introduce the service and make sure the potential customer, on the other side, fully understands the product’s value.
Indeed, at the enterprise level, it might be fine for the organization to offer a free pilot, for instance, as it might reduce the friction on a very complex product that needs the whole organization to be aligned.
Therefore, the onboarding and sales process will highly depend on the ability of the company to show value to have large clients commit to a complex and substantial deal.
Take the case of Palantir, which goes into very complex deals that very few are willing to take, investing millions upfront to do integrations before having the client sign up for the deal.
That’s because Palantir knows that when the deal is in, it’ll become a sizeable multi-year agreement that can be consolidated and grown over time, providing an incredible ROI in the long run.
Palantir is a software company offering intelligence services to governments, institutions, and large commercial organizations. The company’s two leading platforms, Gotham and Foundry, are integrated at the enterprise level. Its business model follows three phases: Acquire, Expand, and Scale. The company bears the pilot costs in the acquire and expand phases and runs at a loss. Where in the scale phase, the customers’ contribution margins become positive.
One of the first mentions of customer lifetime value was in the 1988 book Database Marketing: Strategy and Implementation written by Robert Shaw and Merlin Stone. Customer lifetime value (CLV) represents the value of a customer to a company over a period of time. It represents a critical business metric, especially for SaaS or recurring revenue-based businesses.
Of course, when capital is readily available and revenues grow quickly, sales and marketing people have way more flexibility in giving more – for free – to the potential customer to acquire it.
When capital is expensive, and it’s harder to grow the top line, then it becomes critical to understand what core actions salespeople can take to close deals with a consultative approach.
4 – Customise
As a potential sale draws nearer, tailoring the customer’s experiences becomes crucial.
The key at this point is to organically suggest how specific products or services may meet the consumer’s needs.
Abruptly entering into a sales pitch may pressure the lead and undo the good work done in the previous steps.
Showing the product in action can help solidify this suggestion.
While the advisor is trying to make money for the business, they must remain authentic and genuine.
A tailored solution must be just that: tailored.
Can the business tweak its existing product or service to meet the needs of a specific customer? Can it offer an exclusive discount or promotion?
Customization goes a long way, as long as it’s in target with the overall business strategy.
For instance, imagine you have a software business, but your potential clients ask for consultancy.
Offering a consultancy service on top of the software business can be a great way to acquire them.
Is this in line with the long-term mission of the business?
If so, you can customize your product to enhance it with services.
If not, you might have to rethink your sales funnel and the customers you’re targineting.
5 – Close
The chances of closing the deal are increased by following the above principles.
However, pushback may occur in certain circumstances for a variety of reasons.
In this situation, it may be helpful for the advisor to broach the topic of the potential consequences of not making a purchase.
What might happen if the buyer can’t reach a goal, execute on strategy, or overcome their challenges?
Above all, a successful close should feel like the natural conclusion to discussions for both the business and its new client.
This increases the likelihood that the two parties are a good fit.
When you walk into a deal, make sure you have the right mindset.
Win-win negotiations first rose to prominence during the 1980s, thanks in part to books like Roger Fisher, William Ury, and Bruce Patton’s bestseller Getting to Yes: Negotiating Agreement Without Giving In. Having said that, there was also a shifting mindset at the time as negotiators saw win-win negotiations as preferable to the then-dominant win-lose approach. A win-win negotiation is a negotiation outcome resulting in a mutually acceptable and beneficial deal for all involved parties.
And you can leverage concepts like WATNA, BATNA, and ZOPA.
With WATNA, you can set up negative boundaries for the negotiation.
In negotiation, WATNA stands for “worst alternative to a negotiated agreement,” representing one of several alternative options if a resolution cannot be reached. This is a useful technique to help understand what might be a negotiation outcome, that even if negative is still better than a WATNA, making the deal still feasible.
Whereas with BATNA, you can set up positive boundaries for the same.
In negotiation theory, BATNA stands for “Best Alternative To a Negotiated Agreement,” and it’s one of the key tenets of negotiation theory. Indeed, it describes the best course of action a party can take if negotiations fail to reach an agreement. This simple strategy can help improve the negotiation as each party is (in theory) willing to take the best course of action, as otherwise, an agreement won’t be reached.
And the ZOPA will be the range within which the deal can be successfully closed.
The ZOPA (zone of possible agreement) describes an area in which two negotiation parties may find common ground. Indeed, ZOPA is critical to explore the deals where the parties get a mutually beneficial outcome to prevent the risk of a win-lose, or lose-win scenario. And therefore get to the point of a win-win negotiation outcome.
Key takeaways
Consultative selling is a solution-based, customer-centric sales approach with a core focus on building strong relationships.
Consultative selling is underpinned by a deep understanding of the client. Avoiding open-ended questions and doing some background research on a company can go a long way to establishing trust from the outset.
Consultative selling also advocates active listening, where 80% of the meeting is spent listening and 20% speaking. This approach allows the advisor to identify verbal and non-verbal buying motives often based on emotion.
Business development comprises a set of strategies and actions to grow a business via a mixture of sales, marketing, and distribution. While marketing usually relies on automation to reach a wider audience, and sales typically leverage a one-to-one approach. The business development’s role is that of generating distribution.
The more you move from consumers to enterprise clients, the more you’ll need a sales force able to manage complex sales. As a rule of thumb, a more expensive product, in B2B or Enterprise, will require an organizational structure around sales. An inexpensive product to be offered to consumers will leverage on marketing.
A sales cycle is the process that your company takes to sell your services and products. In simple words, it’s a series of steps that your sales reps need to go through with prospects that lead up to a closed sale.
RevOps – short for Revenue Operations – is a framework that aims to maximize the revenue potential of an organization. RevOps seeks to align these departments by giving them access to the same data and tools. With shared information, each then understands their role in the sales funnel and can work collaboratively to increase revenue.
In negotiation theory, BATNA stands for “Best Alternative To a Negotiated Agreement,” and it’s one of the key tenets of negotiation theory. Indeed, it describes the best course of action a party can take if negotiations fail to reach an agreement. This simple strategy can help improve the negotiation as each party is (in theory) willing to take the best course of action, as otherwise, an agreement won’t be reached.
In negotiation, WATNA stands for “worst alternative to a negotiated agreement,” representing one of several alternative options if a resolution cannot be reached. This is a useful technique to help understand what might be a negotiation outcome, that even if negative is still better than a WATNA, making the deal still feasible.
The ZOPA (zone of possible agreement) describes an area in which two negotiation parties may find common ground. Indeed, ZOPA is critical to explore the deals where the parties get a mutually beneficial outcome to prevent the risk of a win-lose, or lose-win scenario. And therefore get to the point of a win-win negotiation outcome.
Revenue modeling is a process of incorporating a sustainable financial model for revenue generation within a business model design. Revenue modeling can help to understand what options make more sense in creating a digital business from scratch; alternatively, it can help in analyzing existing digital businesses and reverse engineer them.
Customer experience maps are visual representations of every encounter a customer has with a brand. On a customer experience map, interactions called touchpoints visually denote each interaction that a business has with its consumers. Typically, these include every interaction from the first contact to marketing, branding, sales, and customer support.
AIDA stands for attention, interest, desire, and action. That is a model that is used in marketing to describe the potential journey a customer might go through before purchasing a product or service. The AIDA model helps organizations focus their efforts when optimizing their marketing activities based on the customers’ journeys.
Social selling is a process of developing trust, rapport, and a relationship with a prospect to enhance the sales cycle. It usually happens through tech platforms (like LinkedIn, Twitter, Facebook, and more), which enable salespeople to engage with potential prospects before closing the sale, thus becoming more effective.
The CHAMP methodology is an iteration of the BANT sales process for modern B2B applications. While budget, authority, need, and timing are important aspects of qualifying sales leads, the CHAMP methodology was developed after sales reps questioned the order in which the BANT process is followed.
The BANT process was conceived at IBM in the 1950s as a way to quickly identify prospects most likely to make a purchase. Despite its introduction around 70 years ago, the BANT process remains relevant today and was formally adopted into IBM’s Business Agility Solution Identification Guide.
The MEDDIC sales process was developed in 1996 by Dick Dunkel at software company Parametric Technology Corporation (PTC). The MEDDIC sales process is a framework used by B2B sales teams to foster predictable and efficient growth.
STP marketing simplifies the market segmentation process and is one of the most commonly used approaches in modern marketing. The core focus of STP marketing is commercial effectiveness. Marketers use the approach to select the most valuable segments from a target audience and develop a product positioning strategy and marketing mix for each.
The sales funnel is a model used in marketing to represent an ideal, potential journey that potential customers go through before becoming actual customers. As a representation, it is also often an approximation, that helps marketing and sales teams structure their processes at scale, thus building repeatable sales and marketing tactics to convert customers.
Venture capitalist, Dave McClure, coined the acronym AARRR which is a simplified model that enables to understand what metrics and channels to look at, at each stage for the users’ path toward becoming customers and referrers of a brand.
The general concept of Bootstrapping connects to “a self-starting process that is supposed to proceed without external input.” In business, Bootstrapping means financing the growth of the company from the available cash flows produced by a viable business model. Bootstrapping requires the mastery of the key customers driving growth.
The virtuous cycle is a positive loop or a set of positive loops that trigger a non-linear growth. Indeed, in the context of digital platforms, virtuous cycles – also defined as flywheel models – help companies capture more market shares by accelerating growth. The classic example is Amazon’s lower prices driving more consumers, driving more sellers, thus improving variety and convenience, thus accelerating growth.
Business storytelling is a critical part of developing a business model. Indeed, the way you frame the story of your organization will influence its brand in the long-term. That’s because your brand story is tied to your brand identity, and it enables people to identify with a company.
Enterprise sales describes the procurement of large contracts that tend to be characterized by multiple decision-makers, complicated implementation, higher risk levels, or longer sales cycles.
Outside sales occur when a salesperson meets with prospects or customers in the field. This sort of sales function is critical to acquire larger accounts, like enterprise customers, for which the acquisition process is usually longer, more complex and it requires the understanding of the target organization. Thus the outside sales will cut through the noise to acquire a large enterprise account for the organization.
A freeterprise is a combination of free and enterprise where free professional accounts are driven into the funnel through the free product. As the opportunity is identified the company assigns the free account to a salesperson within the organization (inside sales or fields sales) to convert that into a B2B/enterprise account.
Zero to One is a book by Peter Thiel. But it also represents a business mindset, more typical of tech, where building something wholly new is the default mode, rather than building something incrementally better. The core premise of Zero to One then is that it’s much more valuable to create a whole new market/product rather than starting from existing markets.
Palantir is a software company offering intelligence services from governments and institutions to large commercial organizations. The company’s two main platforms Gotham and Foundry, are integrated at enterprise-level. Its business model follows three phases: Acquire, Expand, and Scale. The company bears the pilot costs in the acquire and expand phases, and it runs at a loss. Where in the scale phase, the customers’ contribution margins become positive.
Consultative selling is a sales approach favoring relationship building and open dialogue to adequately meet the needs of a prospective customer. By building trust quickly a consultative selling approach can help the customer better meet her/his expectations and the salesperson hit her/his targets more effectively.
A unique selling proposition (USP) enables a business to differentiate itself from its competitors. Importantly, a USP enables a business to stand for something that they, in turn, become known among consumers. A strong and recognizable USP is crucial to operating successfully in competitive markets.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
