Transactional Sales and Gauging the Marketplace

Before entering your current industry, extensive research was likely conducted regarding competition, consumer pattern, and of course, sales rates.  However, many forget to research the types of sales that consumers are engaging in within the industry.  Let’s take a look at an example of misappropriating funds to create value.  In this scenario, the strategy conflicted with the market paradigm, costing the company mentioned quite a bit of capital.

A large manufacturer of packing necessities had plenty of competition in a market in which 90% of the sales were transactional.  The costs of this particular company were  higher than those of the competition, and they were losing ground as sales were dwindling based on cost alone.  To combat this trend, the organisation felt it best to upgrade their sales team, recruiting those that would act as consultants to clients, helping to build value and justify the heightened costs of the company’s products and services. 
The new marketing angle cost the organisation $10 million to implement and increased operating costs further.  The new costs associated with sales calls and finalising an account were now more than the revenue that an average account generated in terms of profit.  Needless to say, the clients did not want or need the advice of a “consultant”, and the entire sales strategy was deemed a failure.  The end result, of course, was the loss of valuable capital and the exchange of a few important positions.

What happened here?  Wasn’t the goal to build value the right angle to take?  In many cases, an argument can be made that building value is imperative.  However, in an industry such as packing, clients just need packing supplies.  Sometimes, though it may not seem it, the answer is really that simple.  They did not require consulting services, therefore the increased price to offset the cost of the professional consultant/sales team drove clients away. 

Interested in how the company fared down the road?  A larger competitor eventually moved in and purchased the organisation at a substantial discount and changed the sales strategy to one that catered to transactional sales.  The company, now under new leadership, rebounded and reclaimed its place in the industry. 

This example is cited to show how the market strategy should not be challenged when consumers are making the decision regarding sales practice.  If the industry’s patrons call for transactional selling, then that’s exactly what they should get from your sales team and organisation.

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