CURT NICKISCH: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Curt Nickisch.
Closing a big sale with an important client is stressful enough. Imagine bringing a top executive into that make-or-break meeting. That’s what happened in one case that today’s guest studied. An account manager had the division president join the final negotiation. But when the client suddenly asked for more price reductions, that executive was so hell bent on sealing the deal, they were about to agree to something that would have cost the firm two million dollars.
Horrified and dumbstruck, the account manager faked a heart attack to end the meeting early.
It’s not uncommon for CEOs to engage strategic customers around key negotiations. But there’s a fine line between successful outcomes and counterproductive disasters.
Our guest today has spent years researching the role of top leaders in B2B relationships, and he’s going to share how the best CEOs succeed at it. Spoiler alert, being a hands-off CEO or a loose cannon is not it.
Christoph Senn is a marketing professor at INSEAD where he codirects the Marketing and Sales Excellence Initiative. With Columbia Business School’s Noel Capon, he also wrote the new Harvard Business Review article “When CEOs Make Sales Calls.” Christoph, thanks for joining me.
CHRISTOPH SENN: Thank you for having me.
CURT NICKISCH: Let’s start with what people have historically understood, the prevailing wisdom for how involved or not involved CEOs should be on big sales deals.
CHRISTOPH SENN: Well, that’s an interesting question and of course there is an easy answer to it. CEOs should, by all means, engage in customer relationships, maybe not each and every one, but by default, if they take care of their most important customer relationships and treat them like assets, they will be better off, and as a consequence, the whole company, but that’s too simple, especially when you look at the reality.
And in fact, that is something which was also surprising. When we started our research, we really thought that CEOs would just, again by default, interact with customers naturally, but that was far from the truth. But the hard answer to it, of course, is it really depends whether you look at large, medium, or smaller companies. And we found in our 25 years of working with companies across industries all around the globe that it’s easier for senior leaders, CEOs, and their direct reports in small companies to connect customers because if they don’t, they would probably not have the resources they could delegate this task to. If you go to mid-size or large corporations, the picture starts to change completely.
CURT NICKISCH: And in that research, you found five archetypes for CEOs, the different ways that CEOs or top executives approach a sales problem. What did you find?
CHRISTOPH SENN: Well, first of all, we found one role which was not on our radar at the very beginning, although we knew from the anecdotal evidence that it would come up in the research, and this role is called hands-off or not my problem, which meant that the CEOs or the senior leaders were just simply staying away from customer relationships, for good reasons.
CURT NICKISCH: I can see where somebody would take that approach. Why did it surprise you?
CHRISTOPH SENN: Well, the surprise was not the existence of the role but the numbers behind, because we would have expected that may be 10% or so of the whole sample would follow this so-called hands-off for not my problem strategy, but it was really, to our surprise, that fully 28% of those in our study did follow that approach.
So one third, roughly, choose deliberately not to engage in customer relationships. And I must say this motto let the sales force do their job because they are hired exactly for that, that sounds eminently sensible. But on the other hand, we believe, and that was the surprise that you are losing out as a CEO or a senior leader if you are not knowing what’s going on at the frontline. That’s like a general who will never engage with the troops on the frontline and also doesn’t pay attention to what’s going on on the battlefield.
CURT NICKISCH: So there’s another archetype, which is almost the opposite of that, which you called the loose cannon…
CHRISTOPH SENN: Right. And I would say the loose cannon is still a nice word for that role. In our workshops, the account managers we spoke to, they have given us a clear name for these executives who would meet customers without any briefing or debriefing, they call them seagulls, which means the executive seagull flies in, makes a lot of noise, and leaves a mess, and then flies off again.
I know this sounds a little bit provoking, but it really characterizes the heart of the problem. These senior executives, they make unsound agreements, they create poor impression with customers just by making promises the company can later not fulfill, and that in turn creates a highly damaged a relationship.
They also do not seek briefing from account managers. If at all, they may call you up as an account manager just the day before and say, “Okay, hi. I’m in town. I want to visit this customer. Can you arrange a meeting for me?” And then the poor account manager is really super busy in either making this appointment or, as this is a strategy to deal with these loose cannons, maybe finding a way to postpone the meeting until the executive has left town again.
CURT NICKISCH: The next two archetypes are social visitor and deal maker. Explain those and maybe a little bit how they’re different.
CHRISTOPH SENN: Yeah. First of all, we need to understand that both roles are showing one extreme in one of the dimensions of behavior we have researched. On the one hand, we took from literature here the concept of relationship building, which executives can apply to a greater or lesser extent when they are involved in customer relationships.
On the other hand we also took as a second dimension the concept of, or the dimension of revenue seeking. And again, if you do this in a greater or lesser extent that defines the extreme position. So in the one extreme you could have an executive who would say, okay I am seeing customers all the time, I care about the relationships here. I really engage in fostering the relationship long-term to establish trust.
But on the other hand this executive doesn’t care at all about business issues. So in hard terms the executive would just do the wining, dining, the nice meet and greet activities, which is frustrating customers who would look for deeper engagement of course.
On the other hand if you look for the other extreme you would have the executive who would be really, really interested in making sure that the deal is closed. They engage when a significant revenue opportunity arises or when the customer is just about to choose a supplier. And that signal is of course a strong commitment to a particular deal. On the other hand this is not a sustainable strategy, because even rockstar CEOs or senior leaders cannot turn around every single deal. And I would say it’s quite a simple truth that no senior executives want to create the image of losers. So you cannot just delegate the deal-maker role to your CEO every single time. So you can apply this role probably only every now and then, otherwise it’s not sustainable.
CURT NICKISCH: Can you tell me just briefly an example of something that goes wrong in a social visitor, right this relationship building CEO situation?
CHRISTOPH SENN: There is an example I think which shows it very clearly when the senior leader, CEO or anybody with significant decision power agrees to see the customer, but doesn’t really consider the business issues behind. And on the other side you have a customer who would be experienced to a high caliber, senior leader talks, and would sit there with the whole entourage, but the CEO of the supplier company comes all alone. And then the question comes up very quickly, how are we now going to take this forward, because you don’t have your functional experts here with you, dear Mr. Supplier CEO? And that would in turn mean it’s a missed opportunity.
So all they could do is the small talk, but if on the other side you have expectations on business talk then this strategy of the social visitor falls short. It can also lead, and I think that’s a particular pitfall here, it can also lead to the frustration, as I already said, that the sales force on the stance that the social visitor is just here for the nice activities and the groundwork, the dirty work is left to the sales force. So it really pays off if you focus on both dimensions, not just the relationship building, but also on the revenue seeking at the same time.
CURT NICKISCH: Got you. And so the other extreme, the deal-maker with a very revenue seeking CEO, they come in and they want to close deals. You talked about the shortcomings of that, but they also just haven’t done the relationship building and spending the time understanding the customers to really make that work either.
CHRISTOPH SENN: Correct, and dealmakers can do a lot of good. And I would say both the social visitor and the deal-maker role have their positives, but for dealmakers specifically this is not a sustainable sales strategy. Of course, dealmakers engage when there are significant opportunities and the customers really love them for that, but if a dealmaker would only be there just to sign a particular agreement, that again falls short of expectations on both sides, because clever customers would use this as an opportunity to throw in last minute concession requests. And there are a couple of examples described in the article, but I would say to master deal-maker role it’s really important that you master internal coordination.
So I had two CEOs from the same industry. And one CEO was clearly saying, okay I need to be involved in critical relationships both from a relationship, but also from a revenue perspective. And the other CEO said, I will not report anything I’m talking to with the customer to anybody, and especially not to the Salesforce, because this is confidential information, and I need to have my own sources of information. So he was only acting as a deal-maker with at the start some initially good results, but finally it really backfired. And the customer fired this supplier very quickly when he was approached by a more proactive CEO from another supplier who was following a combined strategy, not only talking about single deals, but also about the relationship, the long-term strategy.
And to give you the end of the story that first CEO who said, I will not report what I’m doing, he also got fired. The company got sold. And I think that’s the last thing you want to do when you are a senior leader, that all your business is really going down the drain. So I really think deal-makers have some short notice impact. And in some occasions they may turn around the deal, but it’s not a sustainable strategy.
CURT NICKISCH: Which brings us to the fifth archetype, which clearly just from the way you’ve named it is the best one, it’s called growth champion. Can you talk about just what you saw in these growth champions?
CHRISTOPH SENN: Well first of all it was again, a little bit of a surprise that only 14% in our sample were acting as true growth champions. They all have significant interactions with important customers. They show robust investment and engagement, and they build also strategic relationships through regular meetings. And they even stay in the role, no matter whether they got promoted. Of course not everybody can become a CEO, but a CEO cannot manage 25 relationships as a growth champion.
So you have to be selective also as a senior leader to which customers you apply that role of the growth champion. But I think the bottom line is if you really follow that growth champion role you are creating a positive environment, the favorable conditions for success for both the customer to grow profitably and also for your sales team. If you don’t do that, you’re missing out a huge opportunity. You may get away a little bit with the social visit or the deal maker behavior for some customers who would really engage in more transactional relationships, but every company in the B2B world has strategic customers who are seeking long-term engagement and commitment from their suppliers. So even if it’s only a handful of relationships, it really pays off here as our results then show, when we looked at the performance impact of these roles.
CURT NICKISCH: Hands-off CEOs perform the worst. Loose cannon’s marginally better. You found that the social visitor and deal maker both had positive attributes and positive effects on growth, but it was really this growth champion, somebody who brings it all together, that was the one that really had the most outsized impact and longer-term impact.
CHRISTOPH SENN: Absolutely. And when we look at the numbers, we can really say the hands-off role doesn’t have an impact at all. Even when you look at profitability, it’s slightly negative. So hands-off is not an option. When you then look at the four roles who interact with the customer, either via the revenue seeking or the relationship building dimension, the results start looking a little bit different when you take the low relationship building and low revenue seeking role called loose cannon into account. There is a little bit of growth and a little bit of profitability, so marginally better.
On the other hand, when you look at social visitors, the extreme relationship building role, or deal makers, the extreme revenue seeking role, both generate about two times the growth and three times the profitability of the loose cannon role. If you take these two together, with 28% for hands-off and 21% for loose cannon, it’s half of our sample, neither interacting with the customer or interacting in a very negative way. If we do the math, every second CEO here really doesn’t live up to the full potential.
CURT NICKISCH: So this is really, really interesting research. It lets people, especially in those CEO functions see things in a different way. But also if you’re on the receiving end of this, whether you’re a customer or somebody or an account manager working for one of these executives, can we start? What do you do if you’re the customer or potential client that’s on the receiving end of this? Do you think it can be helpful to look at the CEO or the folks who are running the sales deal and just understanding what their style is?
CHRISTOPH SENN: Well, yes, I think that’s a good way to take it forward. If you were a customer, then you could certainly check whenever you’re going to meet your counterpart for the first time or again, which role they are applying in a dominant way. So if you realize that your counterpart, the senior sponsor from your supplier would more follow a social visitor role, you could help your supplier also to develop stronger revenue seeking capabilities or simply ask for changing the social visitor or adding somebody who can act as a growth champion because that would be beneficial for both parties as our results show. Growth and profitability would by default mean that the relationship is progressing, is showing good signs of growth and profitability and that only happens if a customer would then be willing, not just to spend more money on the supplier, but let the supplier help them grow and find new business opportunities for them as a customer. In turn, the supplier would then grow.
CURT NICKISCH: What do you do if you work for a CEO who gets overly involved in sales deals or is hands off? What are some of the successful ways of managing up in that respect? How do you handle that situation?
CHRISTOPH SENN: Yeah, that’s a good question. We had the case where the senior leaders all came through the ranks of sales and were remembering the good old times when they were account managers. In fact, they started to take over the sales force role and it was our noble job to remind them that their role is no longer to behave as an account manager when they are now assigned a senior sponsor, but really follow the growth champion strategy which means that you leave, of course, some of the groundwork to your sales teams all over the functions or the geographies, but you are involved in both dimensions, revenue seeking and relationship building.
How you deal with these people, I think is relatively easy. You just give him proper briefings. You also make sure that your counterparts on the customer side would point towards a growth champion behavior, and I think then you can really play that very well. It’s harder to deal with loose cannons because loose cannons usually, pop out, out of the blue, like the seagull example. And there, you may have to always weigh your options. It’s not very helpful if you always tell your executive, “Oh, the meeting was postponed last-minute.”
So you really have to sometimes also install processes, like for example, a logistics company did, just to make sure that the sales force is protected. And in this company, the sales force has the right, for good reasons with good evidence, to ask the Board or the senior management to change an executive sponsor if it’s appropriate. But of course that requires, I would say, a very open trustful working culture. On the other hand, it’s also a sign of a highly developed customer focused culture. And we all talk about customer centricity, but let’s be honest, if such processes are still far away from reality, then I think it’s a long way to go for many companies.
CURT NICKISCH: Yeah. And what do you do if your CEO is one of these, has these positive attributes of being either a social visitor or a deal maker, but doesn’t do the other side of that combination that you think makes a growth champion?
CHRISTOPH SENN: Yeah, that’s a very good question. I think there are two ways of dealing with it. One is that you accept that your CEO is a deal maker, but you make sure that somebody else could act as his sidekick and play more the relationship role. In an extreme, I had this myself, when I was an account manager in earlier years. My then CEO was also not too much interested in the relationship building, so we teamed up to fulfill both roles, he more on the deal making and I more on the social side. But that requires a lot of coordination. And I think it can also be played the other way around, when you have a social visitor, you need a strong deal maker. But, best way is certainly that you want to make sure that you simply educate your senior leaders.
And I usually do a very simple exercise with senior teams. I ask them, very innocently, “Why don’t you just give me your observation of how you interact with your customers, if at all, on these two dimensions: relationship building and revenue seeking?” And then we’d plot, without giving them any further information, we’d plot the results and then step-by-step develop the categories of the five archetypes. And by seeing then the results, they start to realize, “Whoa, we have done a lot of good things in the past,” but you can then go further and say, “Okay, now let’s do the math,” and just add the growth figures for sales and profitability to it and say, “Okay, what if we could turn maybe one third of your roles maybe from the lower left, which is more, a little bit loose cannon type or social visitor, deal maker behavior, more to the upper right? How much more business could you do then?” And then the sky is the limit. Usually they get it.
CURT NICKISCH: Christoph, this has been really helpful. Thanks so much for coming on the show to talk about what you learned.
CHRISTOPH SENN: Thank you so much for having me.
CURT NICKISCH: That’s Christoph Senn. He’s a professor of marketing at INSEAD, and coauthor of the HBR article, “When CEOs Make Sales Calls.” You can find it in the March, April 2021 issue of Harvard Business Review or in hbr.org.
This episode was produced by Mary Dooe. We get technical help from Rob Eckhardt. Adam Buchholz is our Audio Product Manager. Thanks for listening to the HBR IdeaCast. I’m Curt Nickisch.
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