We glibly toss around phrases like “We have a transactional selling process,” or, “Ours is a complex selling process.” Often, there is some preening around those making the latter statement, thinking “Real sales people do complex deals!”
Recently, I lurked in a conversation, suddenly realizing, while we glibly talk about these types of selling processes, there’s a lot of misunderstanding of them.
There are probably a lot of valid definitions, but I’ll try to toss out my perspective with some thoughts.
Too often we try to distinguish transactional and complex by average deal size, thinking transactional deals are much smaller than complex deals. That’s probably one of the worst distinctions I’ve seen. Every year, I see companies with transactional processes where the average deal size is $100’s of thousands to $Millions. Likewise, I see some complex deals with average deal sizes under $100K.
For example, there are 1000’s of transactional deals done every year in ordering embedded products, for example semiconductors/electronic components. These transactions may be $Millions each. (The design win that created this opportunity may be a complex sale–more later.)
Often, people try to make the distinction based on product type. For example, “commoditized” products are transactional sales, versus complex industrial/technology products are complex sales. Generally, I don’t find that a good distinction. For example, you can’t get any more commoditized than selling commodities like basic chemicals, oil, water, etc.
The best sellers of these commodities realize the sale is less about the products themselves but more about a larger offering, for example supply chain management, risk management, what the total solution enables the customer to do. In short, they have a different view of what the customer is buying or needs to buy, as a result they de-commoditize the offering, and typically the process becomes complex.
For example, I have a very large client that sells basic chemicals. They approach the process very differently from their competition, as a result command much higher margins and much greater customer loyalty. Rather than quoting a price on a truckload basis, they work the the customer to understand, perhaps there is a different formulation that improves the results they get from the product, it might be packaged or delivered differently to make the product easier to use, they might manage the supply chain/logistics to minimize inventory and supply chain management costs/risk. Their competition is selling fundamentally the exact same product, but my client is approaching the customer with and entirely different way of looking at the purchase, creating a highly differentiated value proposition.
This gets us to the most important point, the real issue is less about our selling process and more about the customer buying process–is it a transactional or complex buying process?
Usually we think of transactional buying as having these characteristics: The customer is very familiar with products/solutions in the category, they have bought frequently and know how to buy, the number of people involved in the decision is very low, perhaps one or two, and, most importantly, the risk if they make a bad decision is very low.
Conversely, complex buying is, well, complex. The customer may not be familiar with the solutions, there may be many different approaches to solving the problem, they don’t know how to buy or tend to make these buying decisions very infrequently. Typically, there are very high fiancial and business risks to the company and individuals if a bad decision is made, as a result, these tend to be more consensus driven, with a large number of people involved in the decision-making process (10.2 based on the latest Gartner data.)
In transactional processes, customers tend to know how to buy, their buying process tends to be more linear and more predictable. In complex buying processes, the customer doesn’t know how to buy and the process can be characterized as chaotic, often with No Decision Made as the outcome.
In both cases, sales people create huge value with the customer by making the buying process easier.
It’s useful not to think of the buying process as binary, either transactional or complex. In reality you might think of a continuum, with pure transactional buying at one end and pure complex buying at the other. In reality buying processes fit somewhere in between either ends of the spectrum. The picture below shows an example:
For example, we might have a Complicated buying process. It may look a lot like a transactional process, for example, the customer may have bought these products frequently, but there are some things the buyer needs to do with each purchase—perhaps some sort of qualification, validation, verification, testing, or something else. For example, any shift in components in medical devices requires qualification and validation processes that can be long and complicated–not complex.
We can have buying processes that may initially be very Complex, but later become more Transactional. For example, in the semiconductor reference above, the design win might be Complex, but the subsequent manufacturing orders (each of which has to be sold because manufacturing typically multi-sources and you want dominant share.).
We, also, can have some solutions that can be either Transactional or Complex, depending on who the customer is and how they buy. For example, many SaaS products are sold to individuals or small groups, may be more Transactional. For example, I can buy a single license of a SaaS based CRM system. I’m the only person involved, I’ve used lots of CRM systems, so I’m very familiar with them, and if I make a bad decision, I’m only out a couple of hundred dollars a month. It won’t have an adverse impact on the business (though it may be a hassle for me). The buying process in these situations can be highly predictable and highly repeatable (Qualify, Understand Requirement, Demo/Propose, Close).
Alternatively, if I want to look at the same system for my entire company, it becomes much more complex. The financial and business impact of making a bad decision is huge. I want more of the users involved, I want IT involved because they are going to have to interface to other systems, and so forth. These become Complex buying processes even though it is exactly the same solution. This is further exacerbated by the fact the buying process for each enterprise looking at the solution will be very different.
It’s really important to understand how the customer views their buying process, aligning how we sell to their buying process. It’s critical to understand, regardless of the process, how we create the greatest differentiated value with the customer–delivering not only great solutions, but helping them make their buying journey easier.
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