Solutions or Products; What's the difference?

By Robert White August 2014

Product versus ‘Solution’ selling: they’re different and your sales people will require a new mindset and tools.

What’s the difference?

Product selling is about the offering – what it does, how it’s built and how well it compares to the competition. The customer must figure out the extra profit, if any, that the Product will deliver. Customers find it hard to figure out the value of a product. It’s why they always buy the smallest number of Products for the lowest price —it’s called commoditization.

Product selling requires the salesperson to uncover a buyer’s need and then describe the product that will most closely satisfy that need.

Solution selling is about clarifying and then solving a multi-faceted business problem that delivers significant and agreed additional profit to the customer. 'Delivery' of additional profit is fundamental to sales success. A Solution, therefore, must always consist of both products and services. The customer will have an imprecise understanding of the problem. So before the Solution can be sold, the problem must be clarified and then quantified i.e. what is the actual problem and is it worth fixing?

‘Solution’ selling requires consultative conversations with customer Executives that must include ‘customer profit’. These interactions cannot be meaningful unless supported by pragmatic analytical and value quantification tools that enable and simplify value based discussions. Discussions are focused on two things:

1. clarifying the problem and quantifying the additional customer profit that results from fixing it and
2. tailoring the optimal solution within the context of a program to deliver the additional profit.

Switching from Product to 'Solution' Selling

Getting the sequence of actions right when switching from product to solution is critical to success

“For any given Change program, up to 60% of anticipated value could be lost if Change activities are incorrectly sequenced” Source: Shell Global Solutions

1. The customers' problem defines the number and type of products required to form the 'Solution'.
2. The products then determine the type of services required for successful implementation and delivery of additional customer profit.
3. The 'Solution' is then formed from a combination of the products and services.
4. The 'Solution' defines the type of people required to sell and deliver it.
5. The 'Solution', and the way it is to be sold, define the tools and processes that are fundamental to achieving the right level of sales within the right timescales.

Products and services may need to be refined or created in order to assure an effective 'Solution'.

Does it really make a difference?

Every case will be different as every sector has different characteristics. The principles apply regardless of sector, the details will change. So, here is a caselet from the medical sector that provides some insight into the power of these techniques to boost profit growth. Many initially find these results literally beyond belief. However, this case, in terms of its outcome, is typical and can be fully validated as can many other examples.

Medical Practice Administration (Med Co)

• Supplier of medical administration services and drugs to Oncology Practices.
• Annual revenues ~ $500m.
• 45 complex products and services.
• Customers would ignore claims of ‘value’ and would only buy on discounted prices.
• Under pressure from primary competitor that was ten times larger.

Customers were presented with individual products or services depending on perceived need from which they picked what they thought they needed or, worse still, could afford within budgets.

Following the principles outlines above, the products and services were rationalized into 5 'solutions' and produced a Value Simulation was produced using Lucidus tools that showed for each solution the additional profit that would flow to each Physician in the customer Practice. Conversations were no longer about which product to buy but which solution could provide the ost benefit to the customer.

Sales were transformed to such an extent that Med Co.'s competitor was forced to purchase it because of the rate at which it was losing market share to Med Co.

“I have never encountered anything like this (Lucidus) before. The ability to reach agreement with a customer on the additional profit they will gain resulting from a relationship with Med Co transformed our company in ways and at a speed that I would never have believed if I hadn't seen it with my own eyes” COO Med Co.

Robert White