Today’s sales scenario is, to say the least, baffling. We have more books on sales than ever, along with unheard-of numbers of sales seminars and an amazing amount of sales training. Yet sales closing rates remain stagnant—80 percent of salespeople fail, and salespeople only last 18 months on a given job.
It was certainly not always this way. Up until the mid-twentieth century, salespeople were competent, and remained stable on the job (some even stayed with one company their whole career). .
The basic problem is rooted in an overall shift, over time, from a human to a mechanical approach to sales. Today this has resulted in the use of an “ideal buyer persona” model in sales (a buyer type which responds the exact same way every time). 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.
Where did we go so wrong?
The “Economic Man”
This radical shift in thinking goes well back before the advent of technology, having its beginnings in the field of economics. In the nineteenth century, an economist named John Stuart Mill described an ideal 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:
- rational in action
- maximizing utility
- responsive to environmental conditions
- endowed with fixed preferences
- fully informed.
This trend was further enforced in the twentieth century when economist Joseph Schumpeter moved away from his Austrian School of Economics colleagues and decided that the economy could be predicted through mathematics and statistics.
The Austrian School is based on an opposite view—that human action is dynamic and cannot be predicted. Human beings, for example, are often irrational in their actions, and sadly thanks to an agenda-driven and partisan media, are seldom fully informed. 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 “fixed preferences” characteristic is seriously wishful thinking on the part of economists—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.
Homo Economicus, in actuality, is a mechanical view of humans. It is the underlying view that has, in the technological era, become firmly entrenched in sales in several significant ways.
Entry Into Sales—”The Ideal Buyer”
The mechanical approach has made its way into sales technology 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 a primary reason I believe that today’s artificial intelligence utilized in CRM can never be accurate in B2B sales. It can never, with its algorithms, accurately reflect how human buyers will behave. AI might function somewhat effectively in the B2C 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 incorrect theory underpins the way a CRM operates and how it is used in practice, the enterprise employing it is already going in the wrong direction. 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 lead 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?
The Mechanical Approach to Selling
The mechanical approach has crept over into—and become fully entrenched in—selling itself. 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.
Returning to our own field, sales is literally the heart of a company. 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.
The most training the average salesperson gets is a few courses from their company, and maybe a couple of workshops if they are lucky. 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.
Not a Profession
For hundreds of years, sales was a crucial part of society. 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.
It’s not just the organizations that suffer from hiring and firing so many salespeople. How does such recurring failure affect the salespeople themselves? Well of course it completely demoralizes them.
The reason for this radical change in skillset 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.”
Hiring practices have been completely impacted by the mechanical approach. 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 churn of salespeople have become the norm.
The attempt to “solve” this furious turnover rate has been the creation of entire industries: sales hiring, sales training and onboarding, 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.
Theory and Practice
For any scientific endeavor, for any trade, or for any discipline to be fully efficient and usable, there is a truth that can never be avoided: there must be 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.
We find that most sales systems, along with most CRM technologies, are seriously lacking in this balance. 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.
On the other hand, much of the sales training in seminars and books consists of theory alone that lacks practice. For example, sales trainers rarely include CRM in their materials to show how their sales systems should be practically applied.
This lack of theory-practice balance is another contributing factor to the deeply flawed mechanical approach to sales.
The Pipeliner Difference
As we’ve shown, sales today is entirely mechanical, lacking any sound theory. The same can be said of sales CRMs. And in both instances, Pipeliner CRM is completely the opposite.
We view salespeople quite differently than most of today’s sales training and philosophies. 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.
Another characteristic of entrepreneurs, according to the Austrian School, 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 possess all the qualities of an entrepreneur—and Pipeliner CRM empowers these entrepreneurial qualities.
Pipeliner is the only CRM system 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.
We believe that humans fundamentally want to learn and improve. 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.
In my next article I will describe in detail how Pipeliner supports this unique approach. 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.
This free educational resource is actually embedded within the Pipeliner CRM platform so that users can, for instance, always access the content most 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.
It is time to reverse this fundamental error in selling and sales tools—from mechanical, once again, to human.