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Smashing the Six Shibboleths of Korean Sales

By Yeri Choi

Journal of the American Chamber of Commerce in Korea

May-June 2001 edition  

 

As the pace of change in business continues to quicken, the savvy operator accelerates to keep up.  Below, a consultant focuses her sights on outmoded thinking among Korea's sales forces - and what changes they need to implement if they are  to remain competitive.

 

           Shibboleth (noun) formal; a belief or custom that is not now considered as important and correct as it was in the past.      

           (Cambridge International Dictionaries)

 

Myths - every country has them.  

 

Be it the legendary founder of Korea, Tangun, about whom every Korean knows, or the heroic and tragic tales of ancient Greece which have had such impact on Western civilization, myths contribute to cultural identity and provide the foundation of a common psyche. In the business field too, myths exist. I consider these to be a collective business "wisdom", formed and adhered to over a long period, which remains unchanged even after the paradigm has shifted. But while cultural myths may have little ill effect, in the fast moving business world, myths often become shibboleths - which, unless countered can obstruct transformation of thoughts. Or to put it another way: myths which crystallize into shibboleths can become embedded in business practices. There are six principle sales myths in Korea that need to be recognized as not only out-dated but potentially devastating to a company's bottom line.

 

Shibboleth #1 -  "Price Takes Precedence Over Value"

 

"Value" in sales terms means either tangible or intangible parts of the product or service that gives the buyer a unique advantage. Value needs to be discussed in a sales proposition: it's often recognized through product differentiation, customization, and added services that provide a solution to the customer.  

 

Until very recently, Korean companies created and provided products or services where the customer easily understood value. There was little product differentiation, nor did the product or the service often require a customized solution. Creating value had very little monetary reward. Therefore, reducing price or simply providing additional products or services free of charge became the natural solution when faced with competition.  

 

Example: a salesperson takes a customer's interest to the proposal stage. The customer tells the salesperson that he or she has heard of a better price from a vendor of a similar solution. Instead of finding out how the competitor's product solution will meet the customer's critical business needs compared to competitor's solution, the salesperson starts price negotiations. A better approach? The salesperson should take early, proactive measures to gain the customer's agreement on the quantifiable value of the product or service. This strategy gives the salesperson control.  

 

Shibboleth #2 -  "Focus on Product Knowledge Rather Than Selling Skills and Business Knowlege."

 

This problem also involves Western salespeople - especially inexperienced and unsuccessful ones. However, it seems to be more predominant among Korean salespeople. I can think of two reasons for this.

 

One reason is that most products Korean salespeople sold in the past did not require in-depth knowledge of buyers' needs because the value of the product or service was self-explanatory. For instance, there's no doubt that a buyer needs an air-conditioner with basic functionality in summer.

 

Another reason, in my opinion, has something to do with Korea's Confucian order and 'rote education' system. From kindergarten to university, teachers instruct students on the textbook facts. Students absorb and recite them in their exams. There is only one correct answer to each question, only one way of looking at things: the teacher's way. No questions allowed.

 

Korean companies, whose main focus until recently was simply producing and selling, train their sales force in product features. Salespeople dutifully memorize all facts and recite them to customers. As product changes, the sales force receive updated product training. The practice continues. To prevent burnout, companies provide their sales forces motivational type seminars based on a star salesperson telling war stories. Some pick up hints and produce better results; many only get momentarily motivated. Product knowledge gives salespeople the basic ability to pitch the product or service. But in a value-oriented business environment, it is the salesperson's insight as to how the product or service will meet customers' critical needs that will open the door to a successful transaction.

 

Shibboleth #3 - "Emphasis on Personal Relationships Rather than Business Relationships"

 

Anyone who has been in Korea for sometime realizes that Korean society operates on the principle of familial, scholastic, business or regional connections rather than on egalitarian principles. Underlying this is the psyche called "jeong." ("Jeong" is similar to the English word "heart" - as in the Damn Yankees' song "You Gotta Have Heart!" from the Broadway hit)

 

For Koreans, having jeong- and being seen to have jeong - is crucial. Someone with no jeong will be categorized as being `selfish' or even `inhuman.' So it is a common practice for Koreans to make business decisions based on jeong - cultivated through relationships. A young CEO of a prominent Korean IT company comments, "The Vice Chairman who used to be my mentor taught me this: `If you want the customer to buy from you rather than from your competitor, have one more bowl of noodle soup with the customer than your competitor does with him/her."' Maintaining a good personal relationship is important no matter where you do business. More important is to what degree it influences business decisions.

 

As Korea moves toward a more egalitarian society and business methods thus become more practical, accountability within an organization is becoming an issue. Buyers will have to choose business partners who understand their organizational needs, who achieve solutions and who can perform to the organization's objectives, rather than simply leveraging relationships.

 

Shibboleth #4 -  "Spend Money on Clients"

 

As in many Asian countries in which a gift-giving culture predominated, bribery is a problem in Korea. To get things done, the beneficiary will present money to the benefactor. Though this is considered tasteless in egalitarian societies, in Korea, it was matter-of-fact.

 

In a business environment where one seller's solution is little different from others, the question as to who is the beneficiary and who is the benefactor becomes crystal clear. The worst case I have heard of so far was in the pharmaceutical industry where it was almost customary for companies to pay off doctors in the form of rebates to get business.

 

Unfortunately, the perception that this practice is `undesirable but necessary', has been reinforced even by salespeople belonging to foreign pharmaceutical companies whose products clearly offer higher value than those of their competitors. I have heard that managers in several foreign pharmaceutical companies recently banned this practice, forcing their sales forces to seek alternative ways of winning sales besides paying off clients.

 

How to outmaneuver your competitors without entering the bribery race? One way is to help your customers perform their business more efficiently. It could be feeding useful information. It could be listening to your customer's problems and trying to provide solutions that are within their reach. Most reasonable customers will eventually recognize the fact that being helped professionally is more advantageous to their careers than simply being paid off.

 

Shibboleth #5 - "Sales Is Not a Profession"

 

Traditionally, under the Korean-style Confucian social order, the merchant class was placed at the bottom - below peasants. Making a living by selling goods was regarded as undignified. Although this thinking has changed dramatically, some stigma still remains.

 

Intelligence, which is highly regarded within Korean values, was not a requirement to become a salesperson. As stated above, the Korean sales environment did not require salespeople to acquire professional selling skills. Nor did it demand constant updates of sales and business knowledge to catch up with changing technology and shifting corporate environments. The sales profession was often reserved for those who could not get into more competitive fields - save those for whom the company chose sales as a strategic training ground prior to placement in more "important" posts.

 

To most Koreans, sales is a job that requires hard work and little respect (except in monetary terms when successful). Very few believe that sales is a profession that requires breadth and depth of business knowledge.

 

There is an encouraging sign, though. In some foreign tech companies, salespeople wield considerable power. This could be because it takes intelligence to understand the complexity of hi-tech products, and/or recognition of the contribution salespeople make to their organizations' bottom line. When Korean salespeople start viewing themselves as problem-solvers to customers and contributors towards their organizations' profits, they will raise the status of their profession. In order to reach this goal, salespeople should constantly strive to obtain new knowledge and skills through continuing education and training.

 

Shibboleth #6 -  "The Customer Orders You.  You Don't Lead the Customer."

 

Confucian values discourage challenging someone with more authority. From the above Korean beliefs comes another shibboleth: 'Try to please the customer by providing what the customer wants without questioning.'

 

There is no doubt that the customer is king and therefore, you have to be customer-driven to succeed. However, that does not mean that a salesperson's role is not to educate, lead, and mange the customer, but simply to take orders. It is hard for the salesperson who has not gone through the proper training and discipline of consulting and educating customers, to have the self-confidence to take the necessary leadership. Consequently, the salesperson ends up placing the control of the transaction entirely into the customer's hands.

 

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