What is Sales?
This blog post was featured in the Huffington Post on July 12, 2017
In my consulting work, I have come across a phenomena: Companies believe they have a strong sales department when, in reality, they have none.
From an accounting point of view, a sale is when an obligation is created for a buyer to give us money in exchange for a product or service we provide them.
So, accounting theory instructs us to decide: When does that obligation really occur—when a purchase order is received or when the product is shipped, or is it only when the money is received?
This definition is appropriate for accounting but can be dysfunctional for management.
Selling is the process of finding a buyer who has a need for our product or services and convincing him or her to make the decision of giving us their money in exchange for our product or service.
Selling is different from order taking.
Some companies, I find, have sales departments who do not sell. They take orders, but because those orders create an obligation for the buyer to pay, it is called “sales,” although the actual process of selling did not take place.
In explaining this distinction, I use the following analogy: The difference between an American salesman and a Turkish salesman in the Istanbul Big Bazaar.
Where is the American salesman standing? Inside the store behind a counter, waiting to take orders and recording sales done.
Where is the Turkish salesman? On the street in front of the store, stopping passersbys and pestering them till they agree to walk into the store where the salesman has a whole slate of reasons why you must buy a product in that store.
To me, the American was just order taking. The sales was done the Turkish way.
This distinction—what is sales, and that order taking is not sales— illuminates why organizations on the aging part of the lifecycle curve are dying. They have no sales function. They have order taking. They rely on marketing to bring buyers into the store, and the salesperson takes the order.
Take the banking industry. Who sells? No one. In my work, I cause every branch manager to have a sales KPI, which means, “Get out from behind the desk and go to the street (not literally). Go join the chamber of commerce, the rotary club, any community-based organization where you can fish for new customers to bring to your bank.”
What is wrong with marketing doing the selling function?
To me, marketing is analogous with ploughing the land, fertilizing it, and irrigating it so that seeding it will work the best. Seeding is selling, and harvesting is order taking.
Fertilizing is necessary for having a good crop, but while necessary, it is not sufficient. Seeding is needed.
Ask yourself who in your company does not do marketing, not order taking, but honest-to-goodness sales?
Be ready for a surprise: The sales function is either non-existent or very weak, while order taking—called sales—is big and flourishing.
Ichak Kalderon Adizes