Sales and the Impact of overselling
Sales leaders recruit, train and motivate salespeople to push the line on anything that can be sold without crossing that line. That is what businesses want and is the difference between growth and exponential growth.
Yet, if salespeople oversell a product feature or benefit, the future relationship with the customer and more is in immediate danger. Not only will it require valuable management time and intervention to re-align the relationship, it also affects the deal, revenues, profitability, and crucially company reputation. A damaged business reputation can have huge business impacts, but for the salesperson they will most likely find it more difficult to generate and do business with other customers as his/her reputation has been tarnished along with the business reputation.
‘salespeople to push the line on anything that can be sold without crossing it’.
There are good levers to prevent overselling and overpromising by salespeople, whilst allowing salespeople to have the autonomy they need to thrive.
Having the right team, training them well, and providing the right motivation such as appropriate compensation plans, effective and slick sales processes, and supportive sales leadership, make a powerful mix to not only prevent overselling, it will also increase sales across the board.
Anyone in sales knows how expensive and difficult it is to acquire a new customer and build a lasting relationship. Depending on what industry you are in, it is 5 to 25 times more expensive to win a new customer than to retain one. In addition to this, profitability from existing customers is a big motivator to nurture them. For example, in Financial Services a 5% increase in customer retention translates in 25% increase in profitability because customers tend to buy more products from the same company over time. They are happy to pay a higher price too to avoid having to find a new supplier. On the contrary, overselling affects a company’s ability to build lasting relationships with customers and miss out on future profits. The reputation of the business and the sales rep becomes a negative factor instead of a positive one. In the traditional bricks and mortars sales world, reps will find it harder to communicate with customers, leaving an opening for the competition. In SaaS, trials will not be converted, fewer deals will be closed, and subscription rates will fall.
Training salespeople beyond the traditional sales techniques can help to prevent over selling. The onboarding of new salespeople is often driven by the overriding objective to have them selling as soon as possible. But; a fine balance needs to be struck in keeping costs of onboarding low and letting salespeople potentially damage your company’s carefully crafted reputation. For this can have profoundly serious consequences. One company we worked with was extremely focused on the ‘get them selling ASAP’ objective. The initial training consisted of selling techniques only. Product knowledge was not part of the curriculum. After one week of intensive sales training salespeople were sent out to potential customers. They had just two objectives: understand any needs and gain clear commitment. Back in the office, the sales manager would analyse the facts gathered and select the right product for the salesperson to present. This method presents a huge risk and inefficiency. The salesperson wasn’t knowledgeable on the product, features, and benefits, therefore they didn’t know when to dig a little deeper, to get clarity and uncover the real problem, and if or how their product could provide the solution. And of course, the sales manager had to interpret the findings of the inexperienced salesperson in order to present the right product, and much like a poor phone signal, details and clarity got lost in the communication. It was also a practice that contributed to churn, high sales staff turnover, in addition to a large mis-selling scandal and significant reputational damage.
Training is not an event, it is key in order to have a sales team that are knowledgeable, present your company as you would want it presented, and uphold the reputation you have worked hard to build. Training is a continuum where learning is encouraged throughout the workplace. Salespeople should learn about the products they sell, the benefits for the customers (and their customers) so that their customers see them as experts and trusted advisers. This should be complimented with a knowledge of the supporting business, how the product or service a customer has ordered actually gets to them or becomes available, and the process it takes. Knowledge and application exams should be considered as part of the induction programme. Salespeople should also learn why overselling or selling products their company do not have causes major problems with their co-workers and the rest of the organisation (see related article/related on The Reputation Impact of Overselling LINK). They should spend time with other departments and experience how even small errors or overpromises on their part affects the rest of the business.
This is not a one-way street either. The live sales situation is often a high pressure one where compromises must be made on the spot to win a deal. Salespeople should be encouraged to take co-workers to customer meetings to experience these pressures, ask for feedback, and review how these can be dealt with without overselling or over promising.
Overselling or over promising has a huge and sometimes irrecoverable impact on company reputation, future earnings, and also individual reputation. Salespeople should be encouraged to push the line without crossing it, but they need to know where the line is and how far is can be flexed. When training salespeople, product knowledge, internal processes and selling techniques are all equally important to prevent overselling and protect reputation.
1. Harvard Business Review
2. Bain and co, Frederick Reichheld
3. Are you overselling? Forbes 2017
This article is part of the Sales and Operations Dynamics series that explores business challenges from both the sales and operational perspective. To help business leaders, sales leaders, operational leaders, and teams understand how to align these functions through understanding, process, structure and collaboration.
Other articles in this series:
About the Authors:
Gert Scholts: I help sales professionals and their leadership create more sales opportunities and close more deals. After 25 years in sales and sales leadership roles, transforming large sales and account management teams at BUPA, Bank of Scotland and Travelex I founded www.thebestsalescoach.co.uk in 2012. I believe corporates can learn from start-ups and start-ups can learn from corporates. This particularly applies to the natural tensions between sales teams and other functions in organisations.
Sonya Kimpton de Ville: with 20 years of experience in operational design and leadership I have seen and dealt with first-hand the challenges due to disconnect between sales and operations, and the impact on customers and the broader business; and have coached teams and leaders on how to work more effectively together. Now founder and CEO of my own technology start-up Grapvyn (www.grapvyn.com), I am helping businesses become more efficient and work smarter, to increase the opportunity, accelerate sales, and drive business growth.