Sales skills in the manufacturing industry
This week, after 25 years at Huthwaite International, half of them as Business Director for the Industrial Sector, Steve Thurlow retires from the company. As a valued colleague for so many years, I thought I’d capture some of his thinking before he puts his feet up. In this long read, we take a look back through the archive and a gaze ahead at the changes in the manufacturing and industrial sector.
In Huthwaite’s 40 years we have offered many things to the world in the way of knowledge, original intellectual property, great technical accomplishments, global project management, and high-quality delivery. So, although we don’t have a factory, foundry, plant, laboratory or goods outward bay, we do have plenty in common with the manufacturing sector. The thing we share most is that manufacturers are always seeking to find, win, secure, serve and grow major customers, and we have spent the past four decades helping them.
“Scarcely a segment or subdomain of the sector has gone untouched in all that time,” says Steve Thurlow. “Partly that’s because we have a very wide definition of the sector. I’ve covered everything from mechanical and electrical engineering, transport and automotive, construction, consulting engineering, oil and gas processing, fabrication, chemicals, mining – and they each present different challenges from a sales process and skill point of view.”
Some of our earliest research, after the formation of the company, was with Xerox Corp. We were running pilot SPIN® events for them all over the world in the mid-1970s, including for what was then Rank Xerox in Europe. In the days before document management became the intrinsic part of the IT sector it is today, it was pure mechanical, electrical and electronic engineering – with a bit of chemical science too. The product engineering background of the first sales people we trained there confirmed everything we thought about the unfortunate tendency to discuss features first, and the powerful improvements people could make if they stopped doing that, and started asking the customers about the problems they were experiencing in their offices. Though we’ve collected data on hundreds of thousands of calls from thousands of companies since those days, that fundamental view hasn’t changed.
Take the heavy end of the transport equipment sector, and how some of the Huthwaite insights back in the 1980s and 1990s really were a revelation.
“Kværner Ships Equipment (now TTS) is a major supplier of products to shipyards and ship owners around the world with whom we worked in Sweden in the 1990s,” remembers Steve. “They had just recruited a number of new field sales staff from its technical department – a familiar pattern of career development common in the engineering sector, and one that is not without its inherent pitfalls.” To help them achieve the transition from focusing on the excellence of the product features (“talking brochures” as Huthwaite’s founder Neil Rackham calls many technical converts to sales) they recognised that effective sales training would be crucial to their success. “They were selling low volume, high value, project-oriented contracts where establishing longer-term relationships was important.”
At around the same time, the international railway engineering company Fiat Ferroviaria (now part of the giant Alstom group), told Huthwaite that reliance on the technical superiority of its products was not enough to guarantee success. Listening to customer needs and thereby building on those relationships was a key priority for the training, but also a challenge.
Steve draws a number of inferences from these earlier client engagements. “To this day, people making that transition from the technical environment of an engineering design centre, to the human interactive skills of probing for customers’ problems and co-operatively integrating business objectives with a proposed solution, can sometimes feel uneasy. But both challenges are essentially about problem-solving. By arming these Kvaerner’s recruits and Fiat Ferroviaria’s international sales team with scientifically researched verbal behaviours, and analytical tools based on a wide base of validated field observation, we were able to build the skills involved in communicating the value for the right solution for each customer upon reassuring bedrock of sound methodology – a reassuring approach for the engineering community.”
In the 1980s and 1990s the notion of “solutions” really started to take root not only of the business lexicon, but in business reality as well. The global giant in bearings, seals and transmission systems SKF was one of the first to recognise that no product, regardless of its quality, will sell unless it resolves a basic customer need. As an SKF spokesperson said at the time: “Our salespeople found themselves in a challenging position: where before they were responsible for selling a single product, they were now being asked to approach the customer in an entirely different way in order to sell a more complete package. We looked at a number of ways to bridge this skills gap, before deciding to contact Huthwaite for assistance.”
“what began as sales skills, account strategy and leadership for the quota-carrying team in the Netherlands,” Steve recalls, “quickly developed into a wide ranging behaviour change for Area Managing Directors, Sales Unit Managers and Service Managers in many countries, so as to integrate the training concepts fully into a cohesive sales strategy.”
It cemented a relationship between Huthwaite and SKF that exists to this day. They key was to enable everyone whose job involved customer contact to become more persuasive in communicating the idea of system level value for every component and sub-component, not merely delivering a well-made product..
Steve reflects on what the breakthrough in communicating those insights over the past 40 years mean for the sector today. “Getting engineers and engineering organisations to see the destination of their products and services in a new way is still work in progress for many parts of the sector. We know from our research that success depends on finding out about the impacts of the un-met needs – at business level – of those prospects. Only when you’ve done that do you start using the technical attributes to illustrate how those problems can be solved. It sounds simple, but we still see every new generation of technical sales people fall into the same traps as their predecessors.”
As a fierce advocate for manufacturing and engineering, Steve is anxious that this should be corrected. “You could say that this skill gap is good for Huthwaite, because we help to fill it year after year. But in a wider sense, as western economies become less able to compete on low-cost high volume primary manufacturing, and more reliant on specialist, high value-added, IP-rich, service bundled solutions, the ability to be able to sit with a customer and make a persuasive case for differentiation at a premium price, based on better outcomes and long term returns, is more critical than ever.”
This is surely true, and yet engineers’ education and training, until the day they first find themselves face to face with a customer, will all have led them in a quite different direction. They deal in facts, figures, tensile strength of metals, properties of solvents, optimum designs for production and so on. The ability to see a technical problem as actually a business problem, to do so through the customer’s eyes, and to engage at a behavioural level with the customer, remains a mystery in many cases. And if that matters in making the sale, how much more does it matter in securing it profitably through sound negotiation skills?
We’ve delivered training of all kinds to the giant petrochemical companies. In some cases it was to help them tackle similar sales issues to those we have just looked at in the transport engineering sector, but significantly it has also covered the need to conclude very complex negotiated deals both upstream and downstream.
“Again”, Steve Thurlow argues, “we’re working with people with great subject area expertise as research chemists in fluid dynamics, or civil engineers in oil rig management, but who at some point in their careers may be responsible for buying or selling processes that could make or cost their company millions of dollars.” Often it’s in the face to face negotiation encounters (rather than, for example, the mathematics of calculating costs of concessions beforehand) that the dichotomy between technical skill and behavioural subtlety can undermine the deal. “That,” he says “is why our evidence-based approach to verbal negotiating behaviour, first peer-reviewed and published 38 years ago, is seen by the highly qualified technicians in the industry as both credible and practical.” It is has also been highly successful, not just on the sell side, but in the procurement area too. One major petrochemical client told us that as a result of Huthwaite Negotiating skills training for 1500 buy side contract managers, they were able to negotiate a 30% cost reduction ($8 million over two years) off a sole source supplier’s vessel day rate, and negotiate a cost neutral deal that gave them greatly increased vessel capability. The same client also has attested year-on-year savings (versus 2008 base) of $26.87million per year as a result of better negotiation across 5 divisions of its business. That’s because we have observed, documented and profiled a success model for the verbal behaviours that a successful negotiator deploys: how she plans to use them and in what balance, and to be conscious of her verbal behaviours in real-time.
In spite of the pace of change in most of the sector, and in many corners of the world, if we peer into the more recent annals of the Huthwaite client case studies, we see – exactly as Steve suggests – much in common with the earlier years. “We were proud to be shortlisted for a National Business Award in the UK a couple of years ago, and the judges wanted to know about the impact our current work was having on our client companies. When we pulled our story together, we even impressed ourselves! “.
He’s right. Cummins Generators have revolutionised the way both its buyers and sellers plan and execute commercial negotiations, with measurable results; CIBA told us that we are we are the only one of their seven salesforce re-engineering streams to have delivered on the agreed KPIs on time and in full. At SCA Packaging we rolled out pre-training research, customised SPIN® Selling training, coaching and consultancy for over 350 sales and marketing staff across Europe – to address questions that were not that different, in essence, from those we discussed earlier from the 80s and 90s. But this was in the second decade of the 21st Century.
As SCA said, “SPIN®’s consultative approach really helps us. Its flexibility has also meant we have a sales improvement tool which accurately reflects the day-to-day world of our sales people. Even the most experienced of our sales teams are adapting their thinking, taking on board new ideas and refining their skills.”
Dr Jean-Marie Schmid, Head of Group Marketing, at one of the world’s leading manufacturers of heating and ventilation products Zehnder has seen similar results in a current long-term project with Huthwaite. “Sellers are learning how to really listen to their customers, to deepen the understanding of their requirements by asking questions, going right to the ground with the customer by digging into their problems. We feel that customers are valuing and welcoming such conversations and we are getting them on-side. Having a better understanding of the customer gets the seller closer to them and helps to shorten the sales cycle.”
That’s a mere snapshot of the story so far. But is everything about to change?
Many of the companies in the industrial sector today make things that did not even exist, in ways that were not even possible, using tools that were not even dreamed of, when we began in 1974 or when Steve joined in 1991. And that process is accelerating.
Economic thinkers and academics, such as Jeremy Rifkin, are widely predicting a much changed world of manufacturing, brought about by the much-hyped “Internet of Things”, Big Data and expressed in production technologies – of which the most talked of is perhaps 3-D printing. In other words, what the internet has done to the distribution of news, music or holiday flights it is about to do to physical goods. In such a world, the increases in shared use of physical resources and products (like energy distribution or motor cars), will lead to reduced demand and investment in traditional company and trading structures, fuelling “a Titanic shift that will redefine the capitalist system” in Rifkin’s words. As he points out, “near zero marginal cost is creating a new economic paradigm known as the “collaborative commons”. By mid-century the big global companies will be niche players, not the arbiters of economic life.” In this interpretation of the future, the energy internet, transport internet and other interconnected sources of production and supply may mean that more and more goods will be capable of production in the same place as they are used, by-passing traditional the traditional physical supply chain, and by implication, ignoring the kinds of companies that currently dominate those markets.
This might be true, in some senses. Or it might in fact be a partial change, affecting some industries, but not others. It is hard to see massive physical infrastructure such as gas turbines, aeroplanes, the underlying telecoms backbone and so on, ever becoming part of the collaborative commons in the manufacturing and deployment phases (however much they might be in the usage and servicing phases). And it is hard to see the shift occurring quite as fast as it has done on the service and consumer sectors, where substitution of this kind seems much easier. Furthermore, by no means everywhere in the world is even close to having the social or technological organisation to make this inevitable in the way that some people see happening in Western Europe and North America.
But it is a good bet that it will happen in many places, eventually.
I put this vision of the future to Steve Thurlow. “I think this means two things for interactive commercial skills,” he says. “First, it’s going to get more complicated. Buyers will soon be looking at these alternative production and ownership structures as, at the very least, competitors to their traditional means of supply, if not a total and immediate substitute for them. So operators who see their sunk cost and near future as firmly rooted in the familiar supply chain will have to build value for their differentiators. That, again, means understanding need and making intelligent links between what the sellers do to help the buyers realise their objectives.
“Secondly, if we accept this view of the future,” says Steve, “then just when we thought the 2008-2011 slump in the advanced economies was receding, so along comes another massive force on manufacturers’ prices and profit – commodity price deflation. That’s been good for some, but disaster for others. Amid all the warp-speed electronic aspects of the future, the ability to negotiate terms (not least, but not only, price in a turbulent economy) remains a skill based on innate human behaviour and the expert deployment of verbal patterns known to achieve successful outcomes in all contexts.”
Steve adds a final thought. “If there really is to be a seismic change in what we think of as manufacturing industry then, as it approaches, I know Huthwaite will be out there, researching what it means for those behavioural skills, and sharing the insights with clients. Meanwhile, I’ll be walking the dog on the beach.”