Today’s Sales Scenario and the Fundamental Error

To say the least, the scene of today’s sales is rather confusing. There are more sales texts than ever, countless sales seminars and endless sales trainingSales Training Sales Training is the process of improving the skills, behavior and mindset of sales professionals to upgrade their selling performance.. Yet sales closing rates remain stagnant—80 percent of salespeople fail, and salespeople only last 18 months on a given job.

Things weren’t always like this. Historically salespeople were generally competent and remained on the job, some even spending their whole careers in a signal company. This was true up until the mid-twentieth century.

The basic problem lies in an overall shift, in sales, from a human to a mechanical sales approach. We see the result of this shift in an “ideal buyerBuyer A buyer is an individual or organizational entity that purchases a product or subscribes to a service. persona” which is expected to respond identically from buyer to buyer. This has led to the use of sales technology (including artificial intelligence) being used to try and optimize humans through technology instead of educating them.

How did we arrive at such a place?

The Strange Case of the “Economic Man”

We can look back well prior to the advent of technology, and discover that this radical shift began in the field of economics. An economist named John Stuart Mill, back in the nineteenth century, described an ideal economic model of a human being which, as economics evolved, became known as Homo Economicus. The term literally means “economic man.” Homo Economicus supposedly has very strict attributes which respond perfectly, and exactly the same, according to certain economic theories, applications and equations. It is described as having six characteristics:

• fully informed.
• self-interest
• endowed with fixed preferences
• maximizing utility
• rational in action
• responsive to environmental conditions

When economist Joseph Schumpeter deviated from his Austrian School of Economics in the twentieth century and asserted that economic trends could be predicted through mathematics and statistics, the trend was enforced even further.

In the Austrian School we find the opposite view, that human action is completely dynamic and impossible to predict. For example, human beings often behave irrationally, and are seldom self-informed thanks to a media that is partisan and agenda-driven. In short, people do not behave consistently—they can act on impulse, make (and even repeat) mistakes, and be extremely fickle. They can act out of enthusiasm or fear, and be motivated by anxiety or overconfidence.

The characteristic of “fixed preferences” really goes beyond logic—for what two people have the same preferences? A person in the mid-20s is going to have different preferences from someone in their 50s. A person in their 20s might want the latest sports car, while someone in their 50s isn’t so concerned with appearance and would rather have something comfortable and cost-effective to drive.

We find that Homo Economicus is a mechanical characterization of humans. It is the underlying view that has, in the technological era, become firmly entrenched in sales in several significant ways.

The Sales Version: ”The Ideal Buyer”

In sales methodology, the mechanical approach has now been expressed as the “ideal buyer.” This model can be found in CRM solutions based in artificial intelligence, and otherwise in the use of algorithms to guide and predict sales. An overwhelming number of sales applications attempt to abstractly model human beings—which, as we’ve just illustrated, cannot be done. Such systems are founded on the claim that buyers behave predictably every time.

This is why I am of the belief that the artificial intelligence found in some CRM applications will never accurately reflect B2BB2B B2B is an acronym for Business-to-Business, a model for selling, relationship-building, or engagement. sales. It can never, with its algorithms, reliably predict how human buyers will behave. AI might function somewhat effectively in the B2CB2C B2C is an acronym for Business-to-Consumer, a model for selling, relationship-building, or engagement. world, such as with Amazon, where there is no human salesperson involved. The buyer clicks to purchase an item, and other purchases can be automatically suggested. But in complex B2B sales, with many different decision points and often more than one decision-maker, AI cannot accurately predict buyer behavior.

When CRM operation is based on incorrect theory, any enterpriseEnterprise Enterprise (in the context of sales) is a relatively large organization typically composed of multiple levels, locations, and departments which need multi-layer software systems that support collaboration across a large corporate environment. making use of it is already headed down the wrong path. And that direction, unfortunately, continues to be the mechanical approach. Numerous CRM applications claim to be “all-in-one” applications—and if you examine them, you’ll see that they are attempting to leadLead Lead refers to a prospect or potential customer (who can be an individual or organization) that exhibits interest in your service or product; or any additional information about such entity. salespeople mechanically. Not only that, they’re making grandiose promises that using the CRM will “grow your sales team and your business” which begs the question: how can a mechanical application possibly do that?

Sales Becomes Mechanical

Selling itself has been absorbed in this mechanical approach. Modern sales technology is targeted at making a salesperson better at selling, under the mistaken belief that technology, all by itself, can make a salesperson into a better performer. How much of a mistaken assumption is this? Well, let’s take an extreme example from another field. Would a superior set of surgical instruments make an untrained intern into an expert heart surgeon? It certainly would not, and you wouldn’t let anyone operate on your heart just based on the tools they possessed.

Looking back to our own field, we can see that the heart of a company, literally, is sales. How is it possible that a company would allow a completely untrained person to touch its “heart”—and let anyone into sales without training? This is just as amazing as allowing an untrained person into open-heart surgery.

At best the average salesperson is able to get, from their company, a few courses and, if they’re lucky, a couple of workshops. That certainly would not be enough training for a heart surgeon, who must attend 8 to 12 years of schooling above and beyond basic education. Obviously, a salesperson shouldn’t have to attend school for that length of time—but that does not mean they should not undergo extensive training in their given profession.

Losing Professional Status

Sales was an essential part of society for hundreds of years. It was a learned profession, just like any other profession. Today, it has been reduced almost to the level of unskilled labor (indeed a large proportion of sellers today default into the role because of limited job opportunities after college) and so the result is often that for every 20 salespeople hired at a company, 10 will be let go. Where do they go? They move on to other companies, where they will also likely underperform.

Organizations aren’t alone in being affected by the constant hiring and firing of salespeople. How does such recurring failure affect the salespeople themselves? Well of course it completely demoralizes them.

Why has this radical change in skillset come about? It is the mechanical approach described above. “Sales systems” now abound in which the attempt is made to reduce human beings to robots that can be replaced if they aren’t performing. The emphasis is no longer on human beings, but on the sales system. Underscoring this emphasis is something a leading sales author recently wrote—that the ability to create a sales team depends on “making everything a system.”

The mechanical approach has completely impacted hiring practices. This impact is most easily seen when an investor invests in a company, and the first thing the investor tells the company is to hire an enormous quantity of salespeople. Only 20 to 30 percent of them will survive, and thanks to this mechanical system supported by this kind of hiring strategy, constant turnover and churnChurn Churn is a term that describes the percentage of customers that leave or cancel a service or product within a given period of time. of salespeople have become the norm.

Entire industries have been created in an effort to “solve” this incredible turnover rate: sales onboardingOnboarding Onboarding is the process or act of introducing a new customer to your product or service; or integrating a newly hired employee into your workforce or team. and training, sales hiring, in addition to an explosion of sales books and seminars. What has been the result of all these “solutions”? No change in closing rates at all. Why no change? Because the underlying completely mechanical approach to sales has not changed. Companies, industries and investors persist in believing that algorithms and AI will solve all their selling problems.

Balance of Theory and Practice

If any discipline, trade or scientific endeavor is going to be usable and efficient, there must always exist a balance between theory and practice. There must be enough theory to impart understanding, and there must be enough practice so that the endeavor, trade or discipline can be readily applied.

This balance is seriously lacking in most sales systems and CRM technologies. To begin with, they are often missing any theory. Trying to work without theory is practice without foundation, which will lead salespeople and organizations completely astray with distorted views of the sales landscape.

Much sales training in books and seminars, on the other hand, lacks practice and consists of theory alone. For example, sales trainers rarely include CRM in their materials to show how their sales systems should be practically applied.

The missing balance between theory and practice is another contributing factor to the deeply flawed mechanical approach to sales.

Where Pipeliner Differs

We’ve now demonstrated that sales today lacks any sound theory. The same can be said of sales CRMs. And in both instances, Pipeliner CRM is completely the opposite.

Our view of salespeople differs considerably from most of today’s sales philosophies and training. We have always characterized the salesperson as the “entrepreneur within the enterprise”—and in the Austrian School of Economics, every human partaking in an economic activity is an entrepreneur. Since human action always occurs within the context of an uncertain future, it is necessarily speculative. However, acting positively in the face of uncertainty is one of the main characteristics of the entrepreneur.

According to the Austrian School, yet another entrepreneurial characteristic is alertness. General alertness and attentiveness enables them to pursue their economic goals. Pipeliner CRM is specifically designed to focus salespeople’s alertness on leads and opportunities and attaining sales goals. Compare this approach to current sales systems that, sadly, try to manage with technology, and basically turn salespeople into ants. As you can see, it’s the complete opposite.

Salespeople can be seen to innately posess all entrepreneurial qualities—and Pipeliner empowers them.

Pipeliner is found to be the only CRM application with solid theory behind its operation. It is firmly based in principles originating in the Austrian School of Economics, of human beings taking action. We believe that the entire theory of Homo Economicus is incorrect because human action cannot be predicted. The Austrian School of Economics sets the stage for understanding human action and working within it.

It is our belief that humans have the basic desire for learning and improvement. Our technology, therefore, does not attempt to “technologisize” salespeople. When salespeople are really invested in learning their craft, Pipeliner CRM becomes a tool with which they can apply what they learn. This is where motivation and learning find true expression and positively impact outcomes.

The ways that Pipeliner supports this unique approach will be described in detail in my next article. In addition, our dedication to helping raise the performance and professionalism of salespeople, and the reputation and integrity of the profession itself, compelled us to also play an active role on the educational side. To this end, we created Sales POP! (salespop.net) an online, digital sales magazine that provides interviews with global sales experts, ebooks, podcasts, whitepapers, and more.

We actually embed this free educational resource within the Pipeliner CRM platform, allowing users to access contentContent Content refers to a material or document released in various forms (such as text, image, audio, and video) and created to inform, engage or influence specific audiences. relevant to whatever task they are performing in the system. No other vendor invests so significantly in such comprehensive educational content—content that is drawn from experts from across the globe so the widest perspectives are shared, and that is free to access so the most people possible can benefit from it. We have done this because, as we have discussed above, we can’t just invest in developing technology. We equally (if not moreso) need to invest in developing our people. This is the only way technology and humans can ultimately complement each other.

The time has come for this fundamental error in selling and sales tools to be reversed—from mechanical, once again, to human.

Start your free, no obligation 14-day Pipeliner CRM Cloud Unlimited Trial.