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holly-sprig

Brain-food for a New Year

holly-sprigHere’s wishing you a happy and healthy festive break and a successful 2017.

As you will soon be thinking about winding down for a well-earned break at Christmas we thought we would provide some food for thought some of which might help you hit the ground running as soon as the new business year starts.

Following are a range of business tips, many focused on sales and marketing, which we hope might help you and your business.  Some are based on topics we have previously covered while others will be expanded in future newsletters throughout 2017.

Read in sequence or click the button of interest:

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Most businesses are doing well these days but it is unusual to find one that doesn’t want to do even better.  If this is you, why not do something different or try doing the same thing differently?  Try something counter intuitive; what is there to lose if what you have been doing isn’t working as well as it did …

to keep doing it hoping for a different outcome was defined by Albert Einstein as insanity.

Has someone “moved your cheese”?

The question relates to the idea put forward in Dr Spencer Johnson’s book “Who Moved My Cheese?” that the source of whatever feeds you (in business; customers and new opportunities) may dry up at some point.  The book draws a parallel between the fruitlessness of continually returning to the now shrinking source and the alternative proactive approach of going out and looking for new sources.  If you have all the business you need to grow to plan don’t give this a second thought, but if new business has been tight in 2016 perhaps you need to look somewhere new.  Read more here

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Why wouldn’t you respond to RFI/RFPs?

If they come from/via a known source, a prospect you have been working with for some time or an established customer, you might choose to respond as you have enough information to assess the risk of losing.  But, if it has come from a company that you barely know the received wisdom suggests your chance of winning is 1:20 or even worse so I recommend you invest your time elsewhere.

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Do you have customers or clients – does it matter?

Many businesses use the word client in the misguided belief that it adds some sort of professional gloss to their image through an implied association with the real professions such as the law. The problem is that client relationships are typically infrequent or transactional being built around specific event(s).  In our view using the term client may say the wrong thing about your brand image and what your business stands for.

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How do your Account Managers stack up as Hunters?

A common model these days is account managers who manage and “farm” established customers while hunters take care of new business; a good model that I have seen work well in many companies but there is one potential big weakness.  Your customer is, in the eyes of your competitors, a new business opportunity so their hunters will be trying to steal “your” customer.  The risk for you is that if your account managers use a “passive/re-active” style to manage the customer they are matched against a hunter who will be assertive/pro-active.  This is not a fair fight so you need to ensure your farmers also know how to hunt. Read more

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Empathy

We all understand this word but not everyone considers it when planning how to engage with a prospect or to maintain a continuing relationship with a customer.  Simplistically; you must communicate with your prospects and customers in a manner they can understand. Discover more here

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Cold is not the same as unsolicited

There is a lot of negative chat these days about cold calling and while some of it is justified it is a mistake to confuse cold and unsolicited.  Every time you approach someone for the first time it is unsolicited – fact!  I see a dangerous trend these days that people are so fearful of being seen as one of those horrible cold callers or spammers they have backed off completely from all forms of proactive one-to-one communication with prospective customers.  So how are you going to find new customers? The key is to ensure your unsolicited communications are warm not cold. More on cold calling here

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Warm up your calls and other first touch points

How do you feel when you receive a call from someone you don’t know, offering something you either don’t need or have already got?  To earn time for a conversation why not use the wealth of data publicly available to learn about your prospect, their business, the problems they may have, the problems in their business sector, etc., etc.  Take that data, process it into useful information and use that to empower your contact strategy – ask pertinent questions so you can talk about the benefits and value they will gain from the solution, rather than the products and services you provide.

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How reliable is your sales pipeline as a source of forecasting information?

If 2016 has been littered with delayed decisions and prospects disappearing off the radar you may gain value from reading this article.  The key message is that you need to put in the work to qualify your prospects and to quantify the opportunities before you can use the sales pipeline as a source of reliable forecasting information.

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AIDA – attention, interest, desire, action

The oldest documented sales and selling philosophy but as true today as it was when first published almost 120 years ago.  The sequence is key and all too often these days’ sales people assume because they are in a meeting with a suspect that they have achieved AID so they focus on action; shall I do a proposal, would you like a quote or demonstration?  The sales person may be ready to do these things, and the other party will probably agree as it is free information for them, but until the suspect has been developed into a true prospect free consultancy such as proposals will almost certainly be a waste of effort as you may have their Attention but you are mistaking courtesy for Interest and Desire.

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Sales proposals – a good or bad thing?

Assuming you have arrived at the right point in the cycle and there is genuine interest and desire then a proposal may be a good thing provided you use it in the right way.  A proposal should only ever document and confirm what has already been discussed and ideally acknowledged and accepted by the prospect. A proposal can be a very dangerous thing if it contains information, conditions, costs, etc., that the prospect was previously unaware of.  Think about it; you inform the prospect there is a delivery and installation charge calculated at 10% of the selling price, but you are not there to see the response, justify the extra cost or deal with the inevitable objection!

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RAF

No not our wonderful air force but a mnemonic for the way sales engagement should be pursued – Ready, Aim, Fire.  Sadly, all too often what I observe is; fire, aim, ready.  The sales person feels good because they are doing something but doing the wrong thing or in the wrong order is worse than doing nothing at all.

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Questions – our most powerful communication tool

Many sales people think it is their role to talk so they can tell the prospect how great their product or service is.  Problem is, while you are talking you are not learning and the most important thing for you is to learn about; your prospect, their challenges and above all what you need to offer them in a solution that they will buy.

    1. Ask open questions, listen carefully and empathetically, ask your next question based on what you heard not what you had written down before the meeting or call and continue the cycle until you have all the information you need.
    2. Ensure you ask questions appropriate to the engagement stage.  While it is perfectly reasonable to ask, for example, about the performance impact the prospect is suffering due to using old equipment, it may be seen as impertinent if you ask this at the first meeting.  Questions should be structured and layered so you build up a complete picture over successive conversations.
    3. Asking the right sort of questions is a demonstration of your knowledge, e.g. “How often do you have to close the warehouse to allow maintenance of the high bay lights?”  This says you understand a small part of their world and when they answer you can assume you have moved a little closer to them trusting and respecting you.
    4. Don’t answer unasked questions. “Your price is too high” is frequently heard but it is not a question so don’t answer it and definitely don’t defend or justify your position.   Instead ask a question – “How much of an issue is that for you” and once answered “Will this stop you doing business with us?” For more on this take a look at this article.
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Polite persistence

A term used in the film Door to Door which is one of the greatest lessons in effective sales and account management techniques I have ever seen.  It is common that suspects and prospects will say no or, just ignore you, innumerable times so how can you keep calling without offending?  Two things; make every attempt to connect different from the last so the prospect keeps seeing/hearing something new, and always be positive and polite hiding your impatience or disappointment.

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Process matters

Being systematic is the best way to gain a predictable outcome.  I have often heard it said that sales people won’t follow a process; they are free ranging, creative people who want to do their own thing. Don’t kid yourself, the best sales people have their own process running in their heads like a background computer program and if they refuse to follow the company process it is because theirs is better.  Find out how your most successful people work and build that into your process for all to follow.

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Never finish a step in your process without agreeing at least one more with your prospect

When a sales person tells me about the great meeting they had with a prospect that then becomes un-contactable, it triggers two thoughts:

    1. They think they have a prospect but the other party probably doesn’t see themselves that way so they have no reason to respond to the sales person.
    2. At the end of the meeting the sales person should have agreed explicitly with the prospect what will happen next and ensure the prospect puts this in their calendar.  At this point some will decline to agree the next event date which is a good indication that they are not a real prospect. This is an example of a technique known as the trial close.

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The trial close

A very effective classic sales technique that is little used these days. Simplistically the technique involves asking the prospect, at logical points in the engagement cycle, whether they are ready to go ahead and purchase from you.  If they say no then it triggers “why not?” and the answer will give you early insight to the reasons or objections the prospect might have that will stop them buying from you. Knowing early enables you to more effectively deal with the objections and a better chance of winning the deal. Give it a go; what can you lose?

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Get your competitors to help your prospecting

In the majority of cases your prospects are someone else’s customers so part of your prospecting run must involve exploring why your prospect may be dissatisfied with what they are already getting, what they might like in addition and what needs to happen for them to change supplier.  So, rather than knock your competition, ensure you highlight all of your strengths and in particular those that trump the incumbent suppliers weaknesses.  All is fair in love and war!

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Product, Service or solution?

Whether what you are selling is a product, a service or a blend of the two you need to present it in terms of the solution it delivers.  You need to help the prospect or customer visualise what they will gain from trading with you. Read more here.

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People

The crucial component in all aspects of business performance and in particular customer facing roles such as sales and account management.  Here is a very brief introduction to four crucial aspects of people performance.  We have written much about this in the past so there is plenty more for you to read if you wish.

    1. Recruitment.  Recruit only the people that meet the criteria for the job. Do not take the best of the bunch as if they are not really right for you, you are simply storing up a problem you will have to solve further down the line. Making this mistake in sales can be very costly both in direct expenditure and worse still lost opportunity.
    2. On-boarding and induction.  You have put in the effort and recruited the right person but they are still “raw material” for your business and unless you invest time helping them to get established it could take them months to get on top of everything they need to do the job effectively.  Each case will be different but they need to understand exactly how you do things; methods, processes and who to ask for help.  Just like recruiting the wrong person failure to induct properly is another great way to waste time and money.
    3. Training.  Sorry you are still not finished. Unless you were extremely lucky and managed to recruit someone who knows how to sell in exactly the way you want it done you will have to train them in your sales and selling techniques and this needs to be done in the context of your methods and processes so you should consider in-house or bespoke training in preference to a public course.
    4. Coaching.  Nope, still not finished.  There is a body of evidence that to perform at consistent peak levels most sales people need regular coaching and this is a primary responsibility for whoever manages the sales people.  The good news is this is one of those things where a relatively small investment produces a very high return. If a sales person produces say 85% of their target they have already covered all their costs and delivered a contribution to the bottom line and anything above that 85% will be very profitable as the CoS is effectively zero.

sales people who receive as little as four hours regular structured coaching per month outperform those who do not by 17% on their sales targetssource: Sales Excellence Council 2007

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Technology enables sales people to be more effective

Possibly but; it is a mistake to make the assumption that deploying technology will automatically deliver effectiveness or even efficiency.  If the sales people spend a day a week populating the CRM is that really a good use of time?  Do they actually sell 20% more by spending a day a week in this way?

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Price, cost and value

News just came in that the Malaysian F1 Grand Prix is to cease in 2018 due to poor attendances (40% of capacity) and the reason cited is ticket prices but as they were pretty much the lowest of the 21 races in 2016 and had been stable for a couple of years is that really the reason?  Many of us who follow the sport are becoming disillusioned by what is now very poor entertainment.  So; is it not the price that turned Malaysian fans off or is it the value, or lack of, they gain from the experience?  The price is what you pay, the cost is the price plus all other expenses required to use the purchase and the value is what you get – make sure your customers are VERY clear on the value they will gain by buying from you.

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Managing Objections

The typical approach to objections is to wait until they happen and then react which generally puts the seller on the back-foot. Managing objections is about being pro-active and pre-emptive; raising the issues, before the prospect does, by answering the questions they have yet to ask.  All businesses have a set of common objections so you should use these to build standard rebuttals that the sales people can use pre-emptively.

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Social media and its role in sales engagement

Many claims are made for the role of social media in sales and I even see the term “social selling” being used.  I will make just two observations on this and leave you to mull over whether your use of social media in sales is likely to work.  Firstly, while social media is clearly a useful marketing tool, can it really be considered to be a selling tool?  Secondly, because of the nature of social media is it possible your sales people have slipped into the mode of broadcasting a message then sitting back waiting for the answer – this is what we call a passive reactor approach and it is dangerous as your competitors who are proactive hunters will have eaten your lunch before you even knew a meal was being served.  There is a time and place to broadcast a message but this can only ever be a marketing activity not selling.

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Cut your cloth … (to suit your ideal customers and your individual customers)

When promoting or selling what you do it is important to address the question the potential buyer will have in the back of their mind “what is in it for me?”  There is no point telling them about your features as that just tells them about you; you need to tailor your messages for their ears so they can fully understand the value they will gain if they buy from you.

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Are you producing the results you need?

Is your sales operation as productive as you need it to be?

I spend my time working with businesses helping them to become more successful and the starting point is always to look at the way they take their proposition to market. Simplistically, how they approach; marketing, sales and selling. Of the many issues that can have an impact on success, I find the most common is the productivity of the marketing and sales operation(s).

In considering productivity I refer to a dictionary definition “the effectiveness of productive effort as measured in terms of the rate of output, or the yield, per unit of input”. Immediately I can see a clue as to where the root of the problem may be found as the definition says productivity is about effectiveness whereas most businesses that I know are focused on efficiency. So while productivity is based on undertaking activities that will produce the desired results efficiency focuses only on minimising things such as time and cost.

First do the right things; only then focus on doing those things right.

While efficiency and effectiveness are not mutually exclusive making efficiency the primary objective usually stifles the very things that would make the business more effective. To gain competitive advantage the aim should always be to work smarter not harder although there is merit in maintaining an appropriate blend of the two.

Why might you want to spend time, and possibly money, making your marketing and sales operation more effective? There are many reasons but by way of a simple illustration; if you employ five sales people and you help them all to become 20% more productive you have in effect gained another whole sales person without having to spend money on; recruitment, induction, training, managing and of course paying them.

Where is the evidence?

It isn’t just me talking to businesses providing anecdotal impressions, the quantitative evidence that there is a crisis in sales performance is clear to see; the data is everywhere.
At the beginning of October during Dreamforce 16, the annual sales conference of Salesforce.com, there was much discussion about “time available for selling” I think this must be an exaggeration but it was reported that in many cases the time available for selling had plummeted to less than 30%. This feels wrong to me but I have observed plenty of situations where the sales people are only engaged in actual sales and selling activities for 50% – 60% of their time.

Other evidence that there is a real problem can be found in research data from CEB (also reported at Dreamforce 16) which shows that the cause of a lot of stalled/lost deals is due to internal organizational complexity rather than action or inaction by the prospect. This chimes when I hear sales people say getting the customer to say yes is the easy part; getting things done internally is when it gets tough.

A few more examples from the research included; less than 50% of sales people achieve their target, high staff churn (voluntary and involuntary), the average tenure for a sales leader is less than 18 months and the average sales person tenure is around 22 months.

Extracts from research undertaken by Accenture, show 59% of sales reps believe they are required to use too many sales tools, while 55% feel that their CRM is more of a hindrance than a help. It is of course well observed that sales people don’t like what they see as admin and many have a personality biased towards freedom of expression so these results are not surprising. However, from my own observations I see many CRM systems that collect low level meaningless data that provides little of value either to the sales people or their managers. I also tend to agree with the observation about sales tools and in particular the lack of integration leading to situations, such as that observed on a recent customer project, where sales people had to look at three separate systems to understand the complete picture about the products and services being used at the clients they managed.

There are also impacts on the quality of life for many sales employees including; working longer hours, being constantly tied to technology sending emails and other messages and being contactable 24 hours a day. I see a lot of dissatisfaction as people struggle to keep up with work while feeling pressured by their managers to do even more.

This brings me back to the point about efficiency and effectiveness. All too often the sales managers’ answer to every ill is do more and do it faster; a perfect example of efficiency (working in a well-organized and competent way) but without regard to the effectiveness of the activity.

If current activity isn’t producing the desired result, then why should more of the same be any different?

Consider a different approach; doing less but doing it better will usually be more effective as it will produce more of what you really want – more customers and deals.

Is there a solution?

It seems ironic that today, when technology can deliver an endless supply of sales and marketing tools, all intended to make people more productive, that the trend is in the opposite direction. It is often the misused technology that is the great thief of time and sapper of innovation.

There has never been more advice available to people through; books, videos, conferences and networking groups (on and off line), but still the trend is for people to be less effective and therefore less successful.

So, it is important to explore whether technology is the solution to, or perhaps the cause of, the problems. Working on a recent customer project I observed the sales people spending at least one hour per day (14% of their time) entering data into the CRM system. The only thing they got in return was e-mails from the boss saying “do more”. What was being recorded in the CRM was very low level activity such as “a call was made” which meant the system provided the boss with nothing that would help him identify issues the sales people might be having as a basis for performance coaching. You cannot manage people by e-mail and spreadsheet!

Technology enables sales and marketing people to access huge amounts of data both internally and also externally about prospective customers and their markets. However, we see cases where sales people are literally swamped by data that swirls around like a fog making it difficult to see the actual target. This presents an opportunity for Marketing to provide concise insights and pointers based on analysis of the market/industry and also for Finance to provide sales ready insights based on a prospect’s annual accounts – or at least a tailored guide to help the sales people spot relevant opportunities within financial figures.

It is also the case that before making a call a sales person uses technology to check; CRM, LinkedIn, Social Media, Google, the customer’s website, credit rating agencies, maybe Companies House, plus they will typically access internal documents such as support call logs and sales visit reports. After the call they send a meeting invite, populate the calendar, send a confirmation e-mail, prepare some material for the meeting (perhaps a PowerPoint), check with marketing for case studies and other sales enablement material, and so it goes in a never ending cycle. Some of this is necessary and useful but not all of it every time!

All of this activity looks like work but the ultimate test is whether it makes the sales people more productive or just busy; are they getting a better yield from effort expended?.

So, yes there is a solution!

Here are a few things to consider:

  • Choose the right people to be your sales people. Recruit and select carefully, understanding that there is currently a limited supply of skilled sales people so you will need to invest in training and on-going development if you want the best for your specific business.
  • Consider the sales and selling methodology you use and whether it helps or hinders your sales people. Some of the methodologies that have emerged in recent years are very complicated and are probably only appropriate for very complex long life-cycle sales situations – sledgehammer to crack nut comes to mind.
  • Use technology sparingly to empower sales people to make better calls and conduct better meetings but ensure the proportions are right. As a start point I would suggest sales people should be spending 80% on/with prospects and customers; research & planning around specific prospects, calling, meeting, e-mailing them and preparing proposals, quotes and presentations. 20% is more than enough for administration, updating the CRM, reporting and attending sales meetings.
  • Ensure there is perfect alignment between what the sales function wants, driven by customer need, and what marketing is delivering to support it. All too often sales people have to spend time re-working collateral produced by marketing to make them a suitable selling aid.
  • Ask yourself if you have made the life of your sales people more complex than it needs to be.
    • A recent fashion has seen the emergence of a function called “Sales Enablement” which basically combines some marketing functions with sales and/or technical support. All too often this new function adds little of value but it does add another layer that the sales person has to work through to get the support they need.
    • Sales enablement often focuses heavily on product knowledge and marketing material when a real enabler would combine it with; process, methodology, skills training and regular performance coaching.
    • Many sales people have limited business acumen, struggling to understand the world they sell into, which leads to them selling the features of their product rather than the solution it will deliver. To entice a prospect to consider their product or solution a sales person must be able to see the world from the prospect’s perspective – asking “If I was the prospect would I buy this from that company and that sales person?

So for the outputs from sales enablement to be of real use they need to be delivered within the context of the business issue(s) they are intended to address; this is where coaching and mentoring from an experienced manager will really deliver great value.

You might also be interested to read:

trending

What’s trending?

 Find out and do something different

I know the world of social media uses as one of its main platforms the idea of trending as an indicator of what someone should follow.  However, this means that a few will have set the trend while many others will simply be hanging onto their coat tails.  I am reminded of the quote from James Goldsmith

“if you see a bandwagon it’s already too late!”

I have always considered benchmarking to come with similar problems to trending.  You look around to see what other companies are doing, use this to create a performance benchmark and adopt it as your own approach.  The problem then is that most companies are doing similar things in similar ways which feels like a gentle progression towards mediocrity.

By all means look at the trends and also benchmark what others are doing but the clever thing is then to do something different, even consider doing the opposite.  I saw a post on LinkedIn recently suggesting in-bound marketing has lost its advantage due to overuse and too much poor quality content – is anyone surprised by this?  The post included a question as to whether outbound direct might be the way forward – again the person asking the question is looking at the dust from a bandwagon – some of us have always done it this way and may be reaping the benefits of fewer competitors.

When choosing which fashion to follow, assess the risks, not just the benefits

When choosing which fashion to follow, assess the risks, not just the benefits

When choosing which fashion to follow, assess the risks, not just the benefits

I once met Stanley Kalms, when he was still chairman of Curry’s, and he explained his “contradictory management” philosophy.  Basically, he would observe how managers were doing their jobs and as soon as a pattern emerged he would issue an instruction to do things in a different way. His view was that it stopped people getting into a rut and forced them to regularly have fresh thoughts.  A similar philosophy was used by someone I once worked for whose advice was to clean house regularly; suppliers, customers, markets, products and sometimes even our people.

So give this some thought.

  • If you have been doing the same things in the same way for say 24 months, take a hard look to see if you are ahead of the pack or in a rut
  • Look at what you do and how you are doing it and if most others are doing it the same way consider a change – revolution not evolution
  • If you look at trends do so with a critical eye looking for a different edge for yourself
  • If you benchmark do so with a critical eye looking at the weaknesses rather than envying the perceived strengths
  • Decide on the five, six, ten things that really matter to the business; the true critical success factors, and take a regular hard look at each of them to see if they are still as effective as you thought they were.  If these things are critical, it is critical they are done right.

The bottom line is; if you really want to differentiate yourself from your competitors you need to be doing different things or the same things differently, but whichever way, they need to be done well.  Just ask your customers; they are a great source as they have the only opinion that really matters.

Happy hunting!

First published on LinkedIn Pulse

stand-out above the rest

Is yours a stand-out business?

… and does it matter if you don’t stand out?

What makes stand-out businesses stand out?

For me what makes a stand-out business is that it delights me in some way that is actually useful in my dealings with that business which in turn makes me happy to not only keep using the business but also to recommend it to others.  So, in judging whether you have a stand-out business start by asking yourself “do customers like using our business, keep coming back for more and willingly recommend us to others?”  This can be done informally but will probably provide more useful information if you do it formally through a well-constructed** customer satisfaction survey.
**open to input of true feedback, not worded to elicit only the answers you want.

Other perspectives can be achieved through the eyes of employees and suppliers and along with customers these are the three major commercial stakeholders in any business.  The other main stakeholder is the shareholders who will typically want to see the value of their holding grow over time and many will want to feel their investment is in safe hands.  In most cases getting the position with the customers, employees and suppliers right will automatically give the shareholders what they want.

Surveys can be used with employees and suppliers to establish how you are doing but another indicator will come from looking at churn; how easily you can recruit and retain people and how readily suppliers work with you.

Making sure customers, employees and suppliers are happy to be a part of the wider business should present itself as a virtuous circle; unfortunately it is sometimes the case that what is good for one maybe bad for the other.  For example; if you have customers who are only interested in the lowest price then this puts pressure on what you can pay your suppliers and also the salaries and employment benefits you can afford.  In this case the circle is somewhat out of balance as the needs of one party outweigh the needs of the others so other mechanisms may be required.  With staff this could be, for example, allowing flexible working and with suppliers guaranteeing them a defined amount of regular business.

stand-out above the restFor me one of the things that makes a business stand out is when I get excellent service from people that go the extra mile to make my life easier and point out things that could be useful to me that I had not thought to ask about. These staff are not even being paid a king’s ransom for what they do, but they are creating a competitive advantage for their employers.

In summary; what makes a business outstanding is creating competitive advantage through either being different, or being better at being the same and both are comparative positions against the norms of the market and the behaviour of your competitors.

Does it matter if you don’t stand out?

There was a time when there were probably more “me too” businesses than those that stood out in some way but life is much more challenging these days so I think it does matter.  If there aren’t some aspects of your business that make it memorable you will struggle to grow and relative to the growth in the economy you may even shrink.

A familiar line from consultants advising companies on growth is “to think outside the box”.  It is generally thought that this term was coined by one of the big name consultancies and it stemmed from one of those puzzles in common use in the 1970s and 1980s where the participants were asked to join a matrix of nine dots, organised in a square, without lifting the pencil from the paper.  To achieve this you have to take some of the lines outside the box and hence the saying.

I find a more useful application of the idea of “thinking outside” the box can be found in the concept known as the Ansoff Matrix.

Ansoff Matrix

As you can see from the diagram, the matrix positions existing (known) and new (future) markets against known and future products.

The majority (some 88%) of business won by established companies falls into the known product sold to known market category. To stand out among their competitors here, they have to add real value to their offering, e.g.  through product quality, responsive customer service, being smarter in what they do.

Could it be that those who truly are stand-out businesses, actively seek out and bring about change by looking for growth and expansion outside the box?

Returning to an earlier argument; if you are struggling to make a decent margin, putting pressure on employee rewards, in your traditional market then looking for a more lucrative market, outside the box, might make a lot of sense.

I have observed a number of examples where food suppliers have eventually found it impossible to run a sensible balanced business while supplying large supermarkets so they have re-invented themselves as suppliers to small independent shops and/or grow an on-line business.

Other than the known/known box there are three other boxes and moving to each carries different levels of risk.  New product to known market carries the lowest risk followed by known product to new market and finally new product to new market.  If you are going to consider a proactive process of moving your business to a different quadrant risk assessment is important; knowing the risks helps you plan to handle them.

Considering new products and new markets will certainly keep your suppliers on their toes while also providing employees with new and interesting challenges.  So, it could be argued that an Ansoff Matrix approach to business planning could help to maintain the virtuous circle of customer, employee and supplier satisfaction while also delivering what the shareholders need from the business.

One other thing.  Today’s new box is tomorrow’s known/known box so rather than a one-off exercise you should consider an Ansoff  review of the business as a part of the strategic planning process perhaps formally re-visiting the topic according to the volatility of your markets.  This should be backed up by informal monitoring through measures such as revenue, margin and market share growth.  This evolutionary approach to business planning is sometimes labelled as agile; an approach to software developed that first appeared in the 1990s.  I think in our rapidly changing world being agile makes a lot of sense and if the Ansoff approach helps such thinking all to the good.

It is common that at the beginning of many of the sales performance transformation assignments that we undertake for our customers the start point is a disciplined review of the proposition the customer takes to market and the markets they target and where their competitive advantage resides.  Using tools such as the Ansoff helps us to facilitate the creative process with a cross section of people from sales, marketing, production and the executive team.  The outcome may be a recommendation to remain with the current proposition being sold to the current market but often it is other quadrants in the Ansoff Matrix that show where the future lies.

A few thoughts  

  • Be aware of how your current business is operating.  Consider customers, employees and suppliers not just shareholders.  Use formal survey techniques as well as informal measures of satisfaction
  • When change is presented explore and investigate it and if it can help your business then welcome and embrace it.
  • Make change happen.  Use techniques such as the Ansoff Matrix to structure your business planning processes and to trigger creative thinking.
  • Involve employees and suppliers in your planning process “many hands make light work” but you also need their hearts, minds and brains.
  • Foster a change culture; create an environment to allow experimentation where mistakes can be made without fear of personal consequences.
  • Equip your people with the skills they need to operate with a continual improvement mind-set.  You also need to ensure leaders and managers have the skills and time to mentor and coach to support colleagues.
  • Think outside the box of your product and market; can you gain inspiration from other industries which will allow you to create that all important competitive advantage?

Remember; if you keep doing what you have always done you will typically get what you always got.  Your only real option is to engender a regime and process of exploration and forward motion focused on continual improvement.

culpability

Maybe it’s them; but could it be you?

culpabilityWe love to help sales people fulfil their potential, but the key to success is not always what you might at first think. Getting better performance from your sales team will probably involve helping them individually with skills and techniques but it will usually also require better leadership and management.

So what is the difference between leadership and management?  This is one of those things where asking a number of people will typically produce a wide range of often contradictory answers.

Perhaps a good place to start is with a view from the great Peter Drucker who after many years of pondering concluded that

“Management is doing things right and leadership is doing the right things”.

If this definition sits well with you then you can start to see why both leadership and management are necessary disciplines and also how they might interface; the leader decides what is to be done and the manager ensures it is done.  Put another way the leader decides the strategy and the manager deploys the tactics to implement the strategy.

For many years Drucker had been uncomfortable that people bestowed the term “leader” upon themselves motivated by pride or ego, believing that “leader” in some way made them superior to managers; it is clear from the above quote that he eventually felt comfortable that both roles had their place.

Leadership and Management in Business

Why business?  Really just to define the scope of what we will cover as these disciplines can be found in the armed forces, police, education, in fact all public services and in professional sport.  To further refine the scope I will use sales and selling as the context for this article.

I have been in leadership and management roles in business for the past 40+ years including the last 14 years when I have had the privilege of working in other people’s companies helping them to make their businesses more successful.  While the primary focus of what we do is performance improvement in the areas of sales and selling our starting point is invariably the leadership team and their strategy for the business followed by extensive work with the leaders and managers responsible for implementing the strategy across the sales operation.

Leadership

A key aspect of good leadership is the ability to clearly articulate the strategy in a form that everyone can understand, can feel motivated by, and above all, can see what part they play in delivering the strategy.  If a strategy is high level and is expressed in language e.g. “improve the ROCE” that most people cannot relate to they will simply return to work and continue doing what they have always done in the same way they have always done it.  Communicating the strategy must make it clear to each employee how doing their job on a day-to-day basis will contribute to achieving the objectives of the business. Cascading the strategy and the KPIs as in a Balanced Scorecard helps in this respect.

For me a key to good leadership is the recognition and acknowledgment that the leader is there to serve the business not the other way around.  In smaller companies where the leader, often the owner, is also the manager of some functions such as sales or production, their primary challenge is to recognise which hat they are wearing on each occasion, and to allow for the effects of their privileged position when judging the corresponding performance of their employees fulfilling the equivalent function.

  • If the leader starts to get involved in day-to-day activities they risk usurping their managers and confusing their teams; I refer to this leader as a Meddler.
  • If they stand up at a company meeting to present the strategy for the next 12 months it is not the time or place to get into operational details. The company meeting should be followed by specific meetings with each operating unit where they can dive into the detail.

Management

While you can lead people, management is a discipline for creating and maintaining the environment that supports the people succeeding in their work, whilst minimising unnecessary diversions.

When considering a management style, the starting point has to be a definition of the purpose and objectives of the business as a whole as well as the various activities the manager is responsible for.  For me a key objective should always be, the creation of staff who can think for themselves, finding new and creative ways to deliver the required results while coping with ‘non standard’ situations.

A poor manager, who doesn’t know how to act through their people as opposed to on their people, will probably resort to ‘micro-managing’; telling them what to do on every occasion and in minute detail.  For sales managers this is evidenced when they focus on relatively low level activity, for instance, pushing to make more calls in order to make more appointments, where what is really needed is better quality contacts or conversations to generate meaningful appointments.  Invariably the drive for quantity is coupled with a fall in quality and a resultant fall in the very thing the manager was looking for; more customers and more orders.

work smarter not harder.”

The problem with micro-management is that it amounts to supervision and just one brain doing the thinking; it stifles creativity, adaptability and evolution in the way of doing things. There is rarely only one way to achieve an outcome, so if the framework within which staff are required to operate is too tightly defined they are unlikely to give of their best.  Supervision styles such as ‘my way or the highway’ rarely lead to improved performance, and they also eat time, constraining the capacity of the ‘manager’ to focus on their complete role. If, as suggested earlier, your purpose is to help people become independent thinkers resolving most of their issues on their own initiative supervising their every move will not deliver the desired outcome. Supervision may be applicable in support of inexperienced people but even here a coaching style will always deliver a better long lasting outcome.

“… teach a man to fish …”

 The risk of becoming a ‘micro-manager’ is at its height for newly promoted managers especially when they take up a post running the team they inhabited.  It is common in sales that the best sales person is made the manager but this is often done without a proper process of selection that would look at the suitability of the person for the role of manager; the result is typically diminished sales results and a demotivated team.  The other common issue is that newly promoted managers rarely receive adequate training or support for their new role leaving them to find their own way; which may be out of the business and back to doing what they’re good at – selling.

Coaching

When working with sales managers who struggle with the idea of ‘managing’ their people, the conversation quickly turns to coaching.  This is a very powerful tool that sales managers should use to help their people avoid or solve their own problems and issues that impact on their performance.

I mentioned earlier that this article was focused on business as opposed to, amongst other disciplines, sport.  However, sport provides an excellent example where coaching is used extensively to enhance and improve performance.  Professional sports people who are at the top of their game have to look for small marginal gains to get that edge over a competitor.

The role of the coach is interesting in that the person they coach will invariably be better than they are at the discipline which begs the question “how can the coach help them?”  Put simply; it is hard for any of us to see in ourselves small blemishes that are clearly visible to others.  Even if we can see those blemishes it may be hard to admit them or perhaps as they have become a part of us we cannot see how to deal with them.  The coach is able to stand back and focus on specific points that need to be improved looking both at the practical and emotional aspects of dealing with the issue.

Everyone who is responsible for the performance of others needs to consider coaching as a key weapon in their armoury.

Considerations for leaders and managers

  1. Style. People will look at their leaders and managers as role models and conclude; if they do it that way, think that way, have those beliefs; then it is OK for me as well.  A business needs a culture of shared beliefs and values that everyone can subscribe to when doing their job.
  2. Beware creating a cult of personality. Strong charismatic leaders and managers tend to recruit and promote in their own image which comes with a number of risks. People will mimic to be accepted but may not be able to deliver within the acquired persona. Those who do not feel comfortable with what they see may feel excluded and above all the team will suffer due to a lack of diversity and variety in its make-up.
  3. Communication must be two-way.  There are points when leaders and managers need to “tell” but there are far more occasions when they need to listen.  Most answers to everyday business issues can be found within the team and involving them will also aid morale, motivation and commitment.
  4. Lead, manage, coach, but don’t supervise.  Lead and coach the people and only manage the environment such as the sales and selling processes.  If you are supervising you will not get the optimum result from your team.
  5. Accountability. Leaders and managers often talk about being responsible but of greater importance they must be accountable – the buck really does stop with you!
  6. Micro-managing – don’t do it!  Recruit properly then train and coach your people so they can use their own creativity, initiative and other personal resources to do a really good job day in and day out.
  7. Don’t allow the urgent to overrun the important.  It’s simple; if you leave the important things as you are focused on the urgent everything becomes urgent and is dealt with reactively which leads to short-term fixes that will see the same problem come round again and again.  So be wary of rewarding the firefighters if you truly wish to cure problems, as this will often reinforce the practice.
  8. Deal with poor performers.  Having tried all you can to help someone improve there are occasions when you have to acknowledge that for whatever reason they are not going to respond and once that point is reached you need act decisively and fairly. But first ensure that the organisation itself is providing the necessary support.
  9. Change is a constant.  Successful leaders and managers accept change as an inevitability and design their organisation to accommodate changes imposed from outside while also continually looking for internally driven changes that will benefit the business.
  10. Be a learning organisation.  Make a key part of the culture the assumption that you can never know everything so learning should be part of the regular routine across the business.  Consider creating a Learning & Development function, or a Knowledge Base to facilitate information sharing and process evolution.

In many of our customers the CEO/MD, who may also be the business owner, also functions as the head of sales; they wear multiple hats and sales can never be their 100% focus.  If it is impractical to have a dedicated sales leader it is even more important to be mindful of the need to lead and coach rather than manage and supervise the sales people.  Initially it may seem that leading and coaching requires a larger time commitment but quite quickly the approach will require less time from the leader as the sales people will have gained confidence from being trusted and will have learnt to function independently.  Ensuring that there is a defined framework in place to specify the aims, essential outputs, quality criteria and control gates will make it easier for the sales leader to monitor performance and decide when proactive intervention might be required; but remember don’t waste time measuring low level activity.

 

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What can sales managers learn from the Olympics?

The Olympics are over, but will your sales managers help their team strive for gold?

When I say sales managers I mean anyone who manages; account managers, new business sales people or desk based telephone sales people.  You may be the owner of a business to whom the sales people report; you are still their sales manager.

So, what can you learn from the Olympics?  In a word: COACHING; a steady, constant, cumulative process that progressively builds performance.

Whenever Olympic competitors are interviewed about their success they rarely say “I” but they do always talk about; the coach and/or the coaching team.  Perhaps it seems odd; a top athlete who has already won Olympic medals looks to someone else to help them perform at the top, but it is a tried and trusted approach.  The same approach can be seen in almost any sport and also other disciplines such as the armed forces that train and practise constantly and the arts where actors, dancers, singers and others also practise and rehearse constantly.  All of this practising, rehearsing, training, etc., is done under the watchful eye of someone who will coach as a means of maximising performance.

Sales people need to be considered in the list those who benefit from structured, regular coaching.  It is not enough to recruit experienced people and assume they will just get on with it.  It is not enough to put people on a training course and assume when they return to the office they will by magic be a different person suddenly able to do things they couldn’t even spell before the course.

The received wisdom from 1,000s of successful sales managers is that their primary role is coaching; working one-on-one and also with the whole team where the sole purpose is to get each individual sales person and the team as a whole to perform better and to be more productive.  Time spent in unnecessary management meetings or pouring over a spreadsheet of last month’s figures is a wasted opportunity.  You owe it to the sales people you employ and the company as a whole to ensure sales management time is proactively focused on performance and productivity as its top priority.

Some things to consider:

  • Allocate 5 hours per month for one-on-one coaching with each individual.  Spend some of this time accompanying your sales people on prospect and customer meetings but also some time across the desk.  The 5 hours per month figure is supported by some independent research conducted in 2014.
  • When managing telephone based sales people spend time sitting at the next desk and/or reviewing recorded calls.  Even with field based staff you should monitor their telephone techniques as well as their face-to-face activities.
  • Allocate a further 5 hours per month for group sessions delivering bite sized training sessions focused on single topics. In your group discussion include reviews of pipeline opportunities and win strategies as well as loss reviews.
  • Create and agree performance measures. Monitor progress towards these and use the results as the basis for coaching to improve future performance.  Every meaningful activity that forms a part of the sales person’s regular work should be a topic for review and coaching; you can get the group to model success for the benefit of the whole team,
  • Do not waste your time, and everyone else’s, by measuring low level activity such as total calls made – the only things that really matter are outputs such as qualified meetings and outcomes such as bids submitted and deals won; these are the meaningful activities that will act as indicators of future performance.
  • So that everyone takes this seriously, work with your HR people to formalise the coaching programme and incorporate it into your regular appraisal process.

Why not use the remains of the summer preparing a new regime to support your sales people through a programme of structured coaching?  Plan a meeting 1st or 2nd September with the whole team to launch the programme so you can really maximise the selling season running up to the end of the year.

First published on LinkedIn Pulse

How can the Sales Manager truly drive business performance?

A good starting point might be a definition of management.  My own simplistic view is that there are broadly three disciplines to consider; leadership, management and supervision.  While leadership and supervision are disciplines that act upon people and can influence their performance I feel strongly that you cannot manage people and that this discipline should be reserved for processes.  Lead your people, manage the processes and if required supervise your people but be aware that reverting to supervision typically means there is a failure in leadership and/or the processes are poorly designed hence they fail to drive the desired behaviours.

Sales management is simply a blend of leadership of the people and management of the processes.  The purpose will be to ensure the company achieves whatever goals and objectives it has set for itself.  In most cases the purpose will be to gain more revenue and probably at an improved margin, but at different times in a company’s life the sales operation may be required to support the achievement of other goals; accessing new markets (business sectors, geographic locations, company size …), introduction of new products or services, or working with new partners being common examples.

The basic model is; the board defines the strategy and the sales manager creates and delivers a plan to realise that strategy.

I have observed many sales managers, through our work helping companies to improve sales & selling performance, and a common behaviour that I see is attempts to ‘manage’ people descending into supervision.  For example, a frequent management tool is to count the number of telephone calls being made hoping it will provide an indicator as to the level of deals that might be done.  Unfortunately, measuring low level activity is rarely a good indicator of performance in terms of what really matters to the business; appointments attended, opportunities identified, bids submitted and the biggy – deals done.

I am a huge fan of Peter Drucker and one of his many observations is worth considering here is :
“Most of what we call management consists of making it difficult for people to get their work done.”

So what should the sales manager be doing?

There are four things that need to be in place to maximise the chances of a sales operation being successful and the sales manager should ensure they all happen and ideally be fully involved in all of them.  Don’t be tempted to leave most of this to HR as this is abdication and dereliction not delegation.

  • Rigorous recruitment where the purpose is to take only those people who meet the pre-determined criteria for the role.  Don’t just take the best from the people that actually applied; if they are not good enough don’t take them!  Better to have the right person join you a couple of months later than planned than take someone simply to meet an arbitrary date.
  • Thorough on-boarding and induction ensuring the new recruits really understand the business and how it helps your customers; what you do, your value proposition and USPs, objectives & goals, market and competitors.
  • Training to ensure the whole sales team has; a consistent level of selling skills, a thorough understanding of your methods and processes so they can follow them without the need to be supervised plus product & proposition training.
  • Leadership and coaching based on understanding how to help people perform effectively and consistently to meet the company’s targets.

The first three steps should only be required infrequently and will typically be completed over a period of two to four months but step four is at the heart of the role as an on-going process of continual development for the team.  Think sports person; to stay at the top of their game all sports people train continually under the watchful eye of a dedicated coach; this is the primary role of sales management -trainer and coach.

leadership and coaching should account for at least 70% of the sales manager’s time

To make sure the new recruits stand the best chance of being successful it is very important to ensure consistency across all four steps.  Don’t be tempted to paint an inaccurate rosy picture during recruitment as this can lead to new recruits quickly becoming disillusioned when they eventually join and the reality does not match the hype of the interview.  During the interview process ensure the candidates understand what will happen if they join.  The key here is; no surprises!

The answer to the question; what should the sales manager be doing, is laid out in the four steps above and of these leadership and coaching should account for at least 70% of the sales manager’s time.  Sitting in offices pouring over spread sheets, attending interminable internal meetings will not help the sales people sell more.  Time spent crying over last month’s poor results would be better spent in the office or the field helping the sales people to close more deals for this month and further into the future.

I have heard it argued that sales managers have to spend time on their role as part of the senior management team or, if they have been given the title of sales director, in the board room.  This won’t make me popular but I feel strongly that sales should be led by managers not directors so there is no need to spend time in the boardroom.  As for senior management meetings; I would have thought a couple of hours per month would be perfectly adequate so that shouldn’t distract the sales manager too much either.

The purpose of employing a sales manager should be laser focused on ensuring sales people sell more and if they do not, then it could be argued that the sales manager is just an overhead.

I would summarise the role of the sales manager as follows:

  • Develop a sales and selling plan to deliver company strategy
  • Put in place metrics based on KPIs, that are totally relevant to achieving the strategy, which provide a simple performance dash board indicating progress of the team as a whole and the individual team members.  A CRM will help with this but make sure the system is a slave to the sales process not the other way around
  • Set relevant achievable targets and compensation plans to match
  • When new people are joining the sales team to take a full and active part in the recruitment, induction and on-boarding of new people
  • At all times lead the people
  • At all times focus on developing the capabilities of the people through training and coaching
  • Hold regular sales meetings where the primary focus is contacts and opportunities and identifying obstacles to overcome and strategies to apply, and sharing success stories; another approach to developing the skills
  • Meet all sales people 1-to-1 at least every month.  Ensure the meetings are genuinely 1-to-1 as it is only too easy to slip into a 1-to-0 where the sales manger does all the talking and telling and the sales person receives a ritual telling off rather than something constructive that they can learn from
  • Accompany all sales people on sales calls at all stages of the sales cycle over a period of time.  The purpose is to observe live situations which provides real opportunities to coach and may also identify areas where additional training may be required.  A typical pattern with an established sales team might involve a day a month with each sales person with the objective of attending two or three appointments
  • Manage the process not the people; coach the people in the process as necessary

Sales Manager should be a dedicated role but if the team is small it may have to be a part-time role.  This is not ideal but if it is necessary then it must be done properly and the key thing is to ensure sales management is the primary not the secondary activity.  Also be aware that the prime discipline of the person undertaking the part-time sales manager role will leak into their sales management approach.  For example, an accountant will focus on historical numbers and at certain times; month end, year end, vat return time; the accountant role will dominate – they will be of little value in training or coaching the sales people who will also only get sporadic management.

The founder/owner/MD as sales manager

In many ways this is simply a special case of the part-time manager but it comes with additional issues.  It is not unusual that the person at the head of the company has previously been the selling resource for the organisation.  This is especially true for smaller companies, or where the founder is still active in a larger business.  I would be very rich if I had £10 for every time I have been told something along the lines of “I am the greatest sales person and if only they were half as good as me …”.  This is well described as Founder Syndrome or even better the more comical version is Founderitis.

The problem is that as the founder or MD you engage in sales activities as the founder or MD not as a bag carrying sales person.  You come with all sorts of advantages arising from your position and title that gives you unfair advantage over the sales people.  Try getting some visiting cards printed with the title Sales Representative, rather than MD, and walk in the shoes of a sales person for a month – let me know how you get on :-) BTW, when I say walk in their shoes I mean the whole job; cold calling on the phone to make appointments, wrestling with the CRM, suffering lack of resource from the technical team, marketing or pre-sales support, etc.

Consider different selling roles

There are two primary selling roles to consider; hunters and farmers.  Typically the hunters , will be professional new business sales people whereas the farmers will be account managers who may have a professional selling background but may also come from a different discipline such as accountant, architect, project management or customer services.  It is also quite common these days that a single person could perform both roles; hunter/farmer.

While the overall philosophy of managing people will apply in all scenarios it is important for the manager to appreciate the potential for different needs and motivations of the different people.  While hunters will generally be totally focused on finding and winning new business, account managers may have additional responsibilities so managing them will need to take account of their multiple responsibilities and a balance must be struck between different objectives.

If sales management has to be part-time do it properly.

If you have such a small team that you cannot sustain the overhead of a full time sales manager and part-time seems to be your only option then consider employing a part-time manager from outside rather than resource sharing internally.

This option means you will get a fully experienced sales manager who comes with all the essential skills and experience outlined above so you get 100% effective sales management during the time they are focused on the role; more than you could expect from the accountant or MD.

I can guess you may be thinking at this point; Shipperlee is a consultant, so this is a case of the butcher saying buy more meat.  Think that if you wish but then think about all the other business functions that you outsource either because you don’t have a full time need or because you want to time share a larger pool of skills and knowledge.

 

Target setting aligned to business objectives

Setting sales targets – a view from management and from the sales team

Sales targets are expressed in a variety of ways with common examples being; revenue, margin or number of units sold.  Targets may be set at the point that an order is taken, when the product has been delivered or the service has commenced or even when the customer pays.

Targets should be set taking account of any factors that could distort actual performance such as seasonality.  The setting of targets should also allow for anomalies such as special offers that may be made after the targets have been set.  We look at both issues in the accompanying article on compensation schemes.

Simplistically, the sum of the sales targets held by individual sales people should equal the amount of business the company wants to acquire through sales in a particular period and typically a trading year.  In a business where customers have an ongoing relationship and pay fees on a regular basis such as for an outsourced service, the target will often be in two main parts; business from continuing contracts and business from new contracts.  The role of maintaining existing relationships and finding new customers may be undertaken by separate teams or it may be a shared role and in the latter case the sales person will normally carry two targets for; continuing business and new.  Where continuing business is part of the mix targets may be applied to maintaining the level of existing business or it may require the sales person to grow it.

Approaches to setting targets

Let’s consider a simple example of a sales team of four people working for a company that wants to grow from current revenue of £3m to £4m over a 12 month period.  If the company has no annuity revenue, as it only supplies products, the whole £4m will have to come from new orders won by the sales people in the 12 month period.  If on the other hand the company does have annuity revenue and of the £3m revenue, £2m is ongoing maintenance contracts then the task for this year is to find £2m extra revenue.  In both cases consideration must be given to whether the sales team have the capacity to find and sell either the £2m or £4m and whether all the support facilities are in place; marketing, lead generation, pre-sales support, technical support, manufacturing & delivery capacity, etc.

Making targets meaningful

I work with a lot of sales teams and a common feeling is that targets are set arbitrarily, by taking the overall target the board has set for the business and dividing that by the number of sales people.  In the simple example above, the company has four sales people who achieved revenue of £3m last year and the same four people will now be required to achieve £4m.  Unless there has been some significant change e.g. better products, it is difficult to see how the fixed sales capacity can achieve an increase of 33%.

This approach invariably leaves sales people demotivated as they feel they are likely to be blamed for any failure to achieve the new target.

There is no point setting unachievable targets, in fact it is dangerous.  The target will usually be the bottom line of the budget so there will be other dependencies within the budget on achievement of the target and in particular expenditure commitments.  So, for example, if a business is planning to take on additional space to cope with the additional work the cost of the space will be committed and incurred before the company knows whether the sales team can achieve the target.

A safer and more meaningful approach to target creation is to work it bottom up, so continuing with our example:

  • Last year the four sales people achieved £3m and the company thinks they can achieve the same this year plus 3% from an already agreed price increase = £90,000
  • A new product will be launched that will increase the value of some orders resulting in an uplift of £120,000. This will feed into the KPIs around which targets can be set.
  • A new re-seller partner has been recruited who is forecasting to sell £250,000

So the above suggests the existing sales team plus the new re-seller partner will produce £3.46m of sales in the year, of which £3.21m  will be down to the in-house sales team.  So logic suggests the budget and targets should be built bottom up from the projected revenue and reflect where emphasis needs to be given, e.g. new product sales to existing customers, contract renewals, …  If the individual sales targets are now determined from this logical approach the company is more likely to achieve its goals and the sales people will understand their individual targets so they are more likely to feel committed and motivated to pursue them.  Rational target setting also supports the sales manager as they work with the sales people in their efforts to achieve them.

If the example company really wants to grow to £4.0m they need to carefully consider how they can achieve it, e.g. budget for additional sales resource, but if they are only just thinking about this as the year is starting they need to allow for the time required to recruit and get the person up to operational speed.  They would also need to consider the fact that the new re-seller is an unknown quantity so may not produce what they have forecast to do.

Having set targets, we now need to consider how to incentivise the sales team to achieve and exceed those targets.

Compensation schemes which motivate

Now you have your targets in place you can build a sales compensation scheme to reflect both the KPIs and the behaviours required to achieve those targets. This will usually be a blend of a fixed amount (salary) and a variable amount (bonus or commission).

In recent years, often driven by economic turmoil, it has become more common that packages are entirely variable so there is no basic salary; if you don’t sell you don’t earn.  While a lot of companies see this as a way of reducing their financial exposure it can have the opposite effect as people need enough money to live and if they are not earning it with you they will turn their focus elsewhere.  A secondary factor to consider is that if people are entirely dependent upon making sales to live it may distort their judgement and in some recent bad cases this has led to the various mis-selling scandals of recent times.

I believe employees will deliver their best performance when they are rewarded properly and with sales people this involves paying a reasonable basic salary whilst still leaving them hungry enough to put in the extra effort to exceed their target.

I am often asked what the difference is between bonus and commission and strictly there isn’t one in so much as they are both variable amounts which correlate directly with the amount sold by a sales person.  Generally, a bonus will be a lump sum such as a fixed amount per unit sold and commission is generally a percentage of revenue or margin.  In the latter case, if the sales person gives discount this will reduce their commission whereas a bonus would be unaffected by discount.

Another approach to paying variable compensation is based on a bonus pool created in line with overall company, or perhaps division or branch office, profitability.  The pool is then distributed according to pre-determined rules.  This approach is valuable if staff other than direct front line sales people, are involved in helping to win deals.  This would cover situations where sales is supported by functions such as; technical engineers, pre-sales support, technical & proposal writers, etc.

There are undoubtedly many other approaches but the core philosophy is to have a fixed sum plus a variable amount and the variable elements must be tied directly to the targets that have been agreed with the individual sales person.

While there are no hard and fast rules about the ratio between fixed and variable amount there are often trends or norms for particular industries.  Another factor is geographic location where basic salaries and often complete packages include a premium for London and other major cities.  Recruitment consultancies are a good source of advice on this but a word of caution, many will want the salary to be as high as possible for their own fee earning purposes.  As a rough guide packages will typically range between 1:4 to 1:1; basic to variable.

The primary purpose of a compensation scheme should be incentive and reward but I have seen plenty of situations where the scheme is used by the employer to find ways to reduce the amount paid.  I have also seen schemes where the sales person has to make sufficient sales, usually determined in margin terms, to cover their basic salary and employment costs before their sales efforts will go towards calculating commission or bonus.  No other class of employee has to cover their costs so why sales people?  These approaches are disingenuous and will ultimately lead to a lack of trust which will probably also reduce sales achievement rather than increase it so the approach is in effect counter-productive.

Tips on creating variable compensation schemes:

  • The simpler the better.
  • Ensure the scheme triggers the behaviours the business wants from the sales people.
    • If the overall objective of the business is to grow revenue then the scheme should be based on revenue and should allow the sales people to give discount within a defined range.  The sales manager should have the authority to offer further concessions again within guidelines.
    • Alternatively, if the business objective is to improve margins then the commission scheme should be based on margin which means any discount given will reduce the commission.

These are just two common examples of how a commission scheme should be tuned to align with the KPIs and overall company objectives.

  • Make sure the compensation scheme is directly tied to the agreed targets and that KPIs and other measurements are aligned between targets and the scheme.  This creates a logical link between the arguments that supported the creation of the targets and the compensation scheme; following the philosophy of SMART objectives will provide a good framework.
    • Consider the pace and rhythm of your business and market.  For example, if your business is seasonal you may wish to tune the compensation scheme to incentivise increased effort to match.  Alternatively you may view it the other way around and wish to apply additional incentive when the market is traditionally slow.
    • What if a sales person misses their monthly or quarterly target but makes it up later in the year?  There isn’t a standard answer to this but it must be considered when designing the scheme.  If achieving period targets is crucial for the business then, provided the sales people know this, it is fine that they lose commission for missing the period target.
    • A scheme based on performance bands, each giving increasing amounts of compensation, will provide further incentive for sales people to perform and will also be fairer to the sales person with a difficult customer list.  This is better in terms of motivation than an all or nothing approach.
  • Leave some headroom to add special one off bonuses when, for example, the company is running a special promotion that will require additional work over and above normal activity.
  • Consider overrides for sales people.  If a sales person will earn £X by achieving their target then an override e.g. extra 10% on all sales made beyond target, will create additional Incentive to go beyond.
  • Sales managers should be compensated through override on the achievements of their sales people.  An example override system would be; for a team of six sales people, the sales manager would get equivalent of 20% of the commission earned by each sales person that achieves or exceeds target.
  • Ideally, a sales manager should not own a sales territory but if they do, the majority of their variable compensation should come via the achievements of their sales people rather than their own selling efforts.

In summary, compensation schemes should be designed to create the required behaviours and provide sales people with the incentive to do what is required to achieve their targets.  If those targets are directly tied to what the company needs and measures, successful sales people => successful company.  The final piece in the jigsaw is to ensure the sales manager’s targets, objectives and compensation are directly tied to the success of their sales people.  Everyone will be singing from the same song sheet, pulling in a single direction, focused on a common objective.

Is there a difference between selling products and services?

This is a question often asked as people look for ways to refine and perfect the way they go to market.  Answering this question is made more complex by the large range of marketing and sales options that people can draw upon.  However, the fundamentals have not really changed; the proliferation of options has just made it harder to see those fundamentals.

While having multiple marketing and sales options is a key factor complicating the answer so is the use of the terms; product and service and also the now common use of the term solution.  Before you decide how you should approach selling what you offer, you must first decide whether what your offer is really a product, a service or a solution.

In answering the question will also provide input to both the strategy and the tactics to be deployed in pursuit of new customers and for growth of established customers.

Product, service or solution?

Although there is a lot of debate around these terms understanding the differences is generally quite straight forward.

  • A product is tangible so it has a specification that describes its capabilities and limitations.  So when you, for example, buy a; car, photocopier, washing machine or accounting package you can compare your needs to the specifications to inform your decision making process.  For the sales person, the specification provides a framework for exploring the needs of the potential buyer as well as a mechanism for describing how well the product fits the buyer’s requirement.
  • A service is intangible but it has a specification that is flexible with the final scope being determined through agreement between supplier and buyer.  The specification will have limitations either because resources are finite or because the supplier has limitations.  For example; a company selling hosted cloud services may only have the capacity to manage projects involving user communities up to 200 so the scope will include a size component.  Similarly; a commercial window cleaning company may limit itself to two story buildings so will not be trying for business to clean the outside windows of a skyscraper.
  • So, what is a solution?  This is one of those questions where if you ask 10 people you will probably get 11 answers.  A solution will often combine products and services but the core differentiator is that a solution provider takes away the problem and delivers back the desired outcome.

Take for example where a business needs some contract labour that they bring in and manage, then the provision of the labour is a service and some might argue the people providing the labour are in effect a product as they come with a specification in the form of their skill profiles and capabilities.  If however the supplier accepted the responsibility for delivery of the desired outcome, within an agreed timescale and to an agreed budget, then an [outsourced] solution is being provided as not only is the supplier providing the labour they are also managing the project to deliver the required result through the use of that labour.

I characterise this as the customer exporting the problem, thus transferring risk and controlling cost,  and re-importing the solution; the authority and responsibility for delivering the desired outcome rests with the supplier.  If that responsibility is on the customer side of the relationship then they are buying a service.

Summary example for a customer looking for cost effective business travel for frequent point to point carrying of samples/equipment.

Options:

  1. Buy Product = buy cars – maintenance costs variable
  2. Buy Service = rent* or lease cars – maintenance costs controlled, admin costs variable
  3. Buy Solution = use taxis* or outsource fleet management – maintenance and admin costs controlled

* Car rental or taxis would be effective for intermittent usage, lease and fleet for frequent/high utilisation

Presenting these three main categories of proposition is probably more of a challenge for the marketing function than it is for those doing the selling.  Once the sales process has commenced there is one-on-one engagement between seller and buyer and hence differences in propositions can be discussed and explained and questions from the buyer can be answered.  For the marketing function explaining the proposition in a one way communication is much harder and it requires good anticipation as to what problems the customer might have so a real understanding of the market is essential.

So what is different when selling products or services?

My high level answer to this question is that there are, or should be, no real differences.  But, the question deserves an answer:

The key difference in the way people approach selling can be found in the fact that; products are made and then sold whereas services are sold then made.

The product is made in the privacy of the suppliers’ environment whereas the service is ‘made’ in the public gaze of the customers’ environment.  A solution on the other hand is more like a Bake-off challenge; the target is defined and the result subsequently appears for judging.

Products have a finite specification and the capabilities and limitations are known and can be demonstrated before a sale is made.  A service can in effect have an infinite, or least very flexible, specification limited mainly by the available resources and capabilities which makes their demonstration more difficult.  A Service Level Agreement is often created to define the boundaries and expected behaviours for a service.

To sell a product you only have to demonstrate what it is, but with a service you have to demonstrate what might be which is a quite different challenge.  All forms of selling require the establishment of trust; the greater the intangibility the more the selling challenge involves the creation of trust without direct proof.

Good effective selling techniques can be characterised by a few key building blocks and all apply whatever you are selling:

  • Bear in mind that whether you think you are selling a product, service or solution, the customer is in effect buying the same thing; a means to achieve a result.
  • Ask don’t tell. No matter how much you know about the customer’s industry or their individual business to try to tell them the answers without agreeing on the question is just arrogant.
  • Use questions to explore and understand the specific concepts the buyer is wrestling with. Once you know what they need to achieve you can start to talk about the features of what you do in the context of their specific vision and you can begin the process of explaining the potential benefits they might gain from working with you.

If the sales person talks about features before understanding the buyer’s needs they gain no value from you being in the room; they might just as well read a brochure.  To illustrate how ineffective this will be, consider a couple of ‘comical’ terms used to describe this behaviour ‘features dump’ and ‘spray and pray’ – both put the onus on the buyer to ‘get it’ and then buy it but there is a very good chance they won’t do either.

  • Use questions to demonstrate that you understand the types of issue they might have, for instance a simple question “What impact has xxx had on your yyy?” portrays an immediate image of someone who really understands their world and the issues they have to deal with. This will trigger a process of mutual needs definition – using the question posed above you will get one of two answers; “the problems it has given us are …” or; “no that isn’t an issue for us but …”.   Either way you have acquired information that you can use to progress the exploration of their needs and the demonstration that you have the answers.
  • Use questions to educate prospects into what might be e.g. “Have you considered what you will need to do when the new xxx comes in?”. They may not have been aware of the requirement/technology/… or may not have thought how it would apply to them yet so you are helping them through your wider sector knowledge.
  • All selling activity requires the establishment of trust and in the case of a product this is potentially easier as features can be demonstrated whereas in the case of a service the features will only become tangible once delivery has commenced. However whether a product or a service the buyer is still undertaking a leap of faith that the supplier will deliver so will require the same amount of re-assurance from the seller. People selling products often underestimate the need to build trust relying too heavily on features as the main selling tool.

In summary, the key to effective selling is to recognise that you are only facilitating the buyer in their understanding of the problem, the potential means of resolution and your ability to deliver it.  You must treat all sales situations; product, service or solution, as a process of discovery, building trust and a demonstration of your capability to deliver.  Demonstrate your knowledge but don’t show off, and make it clear what it will be like for the customer to work with you if they choose you as their supplier.

One final thought; all product is likely to have an element of service e.g. delivery time, packaging integrity, order completeness, reliability, help-line performance, etc and this enveloping service may be the differentiator between you and the competition – so you need to understand how this may impact on the customer’s choice of supplier.  This service may only be required for a short period of time between order placement and commissioning of the product but don’t under-estimate its value in differentiating you from your competition.