Updated: Mar 17
Each provider in an industry has earned a certain amount of sales equity with their customers, and the industry’s performance can be depicted by a bell curve. Most providers will be bestowed with an “average” amount of sales equity, and therefore are largely indistinguishable from one another. In fact, each of your business relationships can be categorized along this bell curve into one of four Sales Equity Levels.
Sales Equity Levels
Antagonistic: If you are categorized as “antagonistic,” you are in trouble— you are noticeably below average, and your customer is actively seeking to replace this relationship. You have likely either failed to deliver on the basic promise/transaction or, worse yet, you’ve broken the trust in their mind.
Transactional: You are average. You deliver a fine product or service for a fair price. You have earned an average amount of sales equity, but have not really differentiated yourself from the other vendors. There is nothing particularly wrong with the relationship— there is just nothing particularly right with it either.
Predisposed: You have earned above-average sales equity with your customer. Your customer will likely continue doing business with you. The customer might even think that moving to another provider would offer better value but ultimately decides the incremental benefit is not worth the switching costs. It is a relationship based on momentum, not motivation.
Trusted Advisor: You are noticeably better than your industry competitors and have earned high levels of sales equity with this customer! Your customer recognizes the value you create for them, professionally and personally. The customer decides that their life is better with you in it; you do more than provide a product or service.
How Do Levels of Sales Equity Play Out In Real Life Relationships
To put this in perspective, say you hired a contractor to renovate your kitchen. This is a big deal for you— it is an expensive renovation and an emotional purchase. You are going to be put out of your kitchen for months, and you’re going to have a stranger in your house all day, every day. You will probably keep a close eye on your contractor during the first week or two of construction, looking for clues about his trustworthiness and expertise.
At this point, your relationship with the contractor is strictly transactional. He is just a vendor to you right now. You expect him to perform, but right now your relationship with him is “fine.” But as time goes by, it becomes apparent that you made a wise decision. The contractor proves to be conscientious and capable, and he finishes the job on time and within budget. You recognize and value his integrity and competency, and begin to consider what other projects he can do around the house.
Around this time, your spouse reminds you that you promised to renovate the basement once the kitchen was done. You decide that your contractor did such a good job on the kitchen that you are going to hire him again. You are now predisposed to expanding this relationship, and he is starting to earn above-average sales equity with you.
You hire him again for your basement renovation, and he does terrific work. You refer him to a friend, who also becomes a fan and cannot thank you enough for sending him their way. A year later you bring the contractor back in for a bathroom remodel— he has earned significant sales equity with you and becomes your Trusted Renovation Advisor.
You decide he is your renovation guy from now on. You call him first whenever you have a problem or need advice, and you trust his recommendations. You do not have to think twice about hiring him or referring him to others.
Sales Equity in the Business to Business World
These same four Sales Equity Levels play out even more so in the B2B world. As a supplier, you begin a new relationship with your customer (acquisition), you work hard, and get paid for that initial work; you have had a perfectly fine transaction. As you begin building above-average sales equity, you reach the predisposed level. If all goes well, you earn significantly higher levels of sales equity and become your customer’s Trusted Advisor. That’s the plan at least, but the reality is often much harder. An Accenture study found only 12% of Chief Sales Officers believe their customers and prospects view them as trusted partners— the majority view them as “fine” transactional vendors.
We find similar results in our research. Looking across multiple industries, we typically find that only 10% to 30% of customers consider their salesperson and/or account management team to be their Trusted Advisor. Breaking this down even further, we see the average company has 34% of its customers as Transactional and Antagonistic, thus making them “at-risk.” It can be
challenging to move clients up from one level of sales equity to another, but the benefits of doing so are invaluable.
Give us an example of a Trusted Advisor in your life in the comments below! Follow us on Linkedin at “Encompass CX” for more information and weekly updates!
Co-written by Alexis Audeh