Friday, October 21, 2016
Trust. It’s the backbone of friendships and relationships, but not all business partnerships. In fact, Anova found that the trust built from a positive past experience can be influential in many Mature market sales situations, but did not play a role in decisions within Growth markets. Ultimately, a fundamental distinction in how each of these markets are constructed leads to this difference.
When we looked at reasons for selecting a vendor in Growth markets, a prior relationship was only mentioned by 4% of all respondents. Growth markets, by Anova’s definition, are dynamic industries heavily influenced by disruptive providers bursting onto the scene offering new products and technologies. There is little opportunity for a prior experience to even exist, as there always seems to be a new competitor with a more advanced product or innovation. In these fast-moving arenas, legacy relationships are not weighted as heavily in final decisions. Decision-makers, in turn, value innovation, efficiency gains, and the ability to actually accomplish a specific organizational need. Imagine the complexity here for sales organizations selling in these markets – each sale is like starting a new relationship, and it takes a lot of effort to build trust with the prospect. Our research found the sales effort in this market was a leading criteria for choosing a product, second only to the product features. The takeaway: salespeople in Growth industries need to put forth a stronger sales effort during the actual sales process to compensate for the lack of a pre-existing relationship.
In Mature markets, however, a positive past experience with the winning provider was cited 22% of the time. This is a substantial difference between the two markets. The main reason for this is trust. Renowned author Stephen Covey acknowledges this attribute in saying, “When the trust account is high, communication is easy, instant, and effective.” Mature market sales teams are more likely to have the benefit of a past relationship to aid the effectiveness of their sales efforts.
While disruption defines the Growth market, the Mature market is largely made up of financial services organizations and more stable enterprises. When managing a person’s financial status or handling his money, particularly his hard earned savings, trust is paramount. Mistakes are not only costly, but personal. There needs to be a high level of conviction and even comfort that the hired vendor will provide the service and integrity sought. Often times, this confidence felt by the decision-maker comes from having worked with the vendor before in a positive, trusting way.
Trust resulting from an existing or prior relationship proves to be the second-largest delta amongst reason for choice mentions – an 18% difference. While Mature markets recognize the comfort of working with a past relationship during sales opportunities, research does not show the same for Growth markets. In either case, though, both markets need to build and sustain trust with new and existing clients in order to retain their own client base.
In the next post we will explore how brand can be influential between the Mature and Growth Markets.