Tag Archives: sales

manage sales

Manage sales activities, not just outcomes

What do you think is going to happen if you think the way to manage your sales function,  is  simply double last year’s sales to create this year’s targets?

  1. Your sales will double?
    or
  2. Your sales staff will start looking for new jobs?

I’d vote for B every time. As you can’t just double sales without a plan, and only checking in on a sales teams performances at the end of a year is a disaster.

See there is a couple of things wrong with just setting bigger targets.

  1. Targets require resources to get you there.sales activities
  2. Targets are designed to tell story at moment in time, not help you with the journey to get there.

Manage Sales Activities

Most people are aware that sales require activities to generate them, and that series of activities is normally called a pipeline or funnel. Perhaps 10 leads give you one prospect, and 10 prospects generate you one sale. In that example, 100 leads generate 1 sale. So to double your sales, at the simplest level, you need to double the number of leads you generate. If your average sale is $50K and your business turns over $1M a year, you need another 20 sales to get you to your two million, or another 2,000 leads require generation per year.

(Note you can also focus on multiple funnels, changing the ratio’s and the size of the sale!, but Im not talking about this today).

So to specifically address point 1, to double your sales you need to invest in doubling all the activities in your pipeline. I.e. how are you going to generate another 2,000 leads? Spend more money on SEO?, Spend money on PR?, Spend money on a content strategy? Spend money on advertising?

Hopefully I make my point. A sales target without a supporting plan and resources allocated to achieving it will fail. Sales staff know this and will start looking for a new job before they get blamed for managements lack of planning and execution.

The second thing wrong with just setting a bigger target is its focussed on measuring performance at the end, not along the journey. Making it much tougher to manage sales staff.

Set Activity Targets

I’m a big fan of two types of targets – sales outcomes and the end of a big period (monthly, quarterly yearly) and activity targets for your regular meetings (daily, weekly, fortnightly).

By your performance, you will be able to generate indicative ratio’s of how your sales funnel works. For example (for normal week):

• 10 leads from the website.
• 20 leads from advertisements in industry magazines.
• 10 leads from attending two events.

We may also discover that roughly 10 leads generate us 1 prospect, and 10 meetings with prospects generate us 1 sale. Therefore, our baseline operational cadence per week is:
• 30 leads generated from Marketing Activities
• 2 events attended
• 10 leads generated from events, and
• 10 prospect meetings conducted by sales people
However the average week has no sales, as our $50K sales occurs every 2.5 weeks!

Therefore a weekly sales meeting focused on sales outcomes only would be less than useful as even though we are supposed to generate sales averaging $20K per week, sales occur only once ever 2.5 weeks and are that the $50K per sale level. Hard to tweak your activities, when you are guessing on outcomes.

But a sales meeting focused on our activities and whether we have the required operational cadence is vastly more useful.
For example if out week generated (with suggested decisions in brackets)
• 30 Leads – from the website (Big Week!, is this a trend that means our ratio’s need revision?)
• 0 Leads – from advertisements (better investigate what’s happening)
• One Event – attended by sales staff (need to lift our game and identify some events to attend)
• 20 Leads : from the one event (can we discuss what made this event such a high performer so we can replicate it?)
• 5 Meetings – Attended with prospects (That’s too low, what’ss preventing us from getting out the door?)

You see focusing on your sales activity or your sales cadence allows you to make small changes to improve performance as they suggest themselves. Focusing on outcomes only makes staff either happy or sad.  Manage sales activities!

see the forrest and the trees

My catch phrase this week has been “Think like a Marketer, Act like a Salesperson”

A colleague went to raise $16M with a cunning plan. Two investors told him his plan was stupid, not cunning, and he pretty much threw his pitch in the bin.

See the forrest and the treesAnother colleague deployed some new infrastructure, based on market research for the demand. He blew his dough as it turned the research wasn’t nuanced enough. There was no demand for the new version of offering.

Now I have been a marketer and a salesperson, and what I have noticed is that most people have a tendency to think like a salesperson, and act like a marketer. However, success in business development tends to come from operating the other way round. What do I mean?

Sales people operate at the coal face, consequently their intuition and insight into how customers feel is excellent  – they are constantly altering their behavior based on feedback. However they tend to wear their hearts on their sleeve. If three customers in a row hate a new product, they will give up on selling it.  They don’t see the market, they only see the prospects. (Just see the trees, but can’t see the forrest)

Marketers have a much more dispassionate view of market places. They may estimate, as in the case of Encyclopaedia Britannica, that only one person in a hundred has demand for their product. Therefore logically, 100 people need to be approached to make one sale. However, they are always abstracted from customers, relying on research rather experience. After a while their gut feel becomes so disconnected, that they can be convinced that jumping into the fire is a good idea, if the data supports it.  (just see the forrest, but not the trees)

So, if you think like a marketer “I will have to speak to 25 investors to get one interested (a 4% response rate) then act like a sales person “I notice they wince every time I suggest it will only take 12 months” you end up doing the hard slog, but learning and refining every step of the way.  A winning strategy.

I think its an handy mental framework when trying to develop new business around new products and markets.

So, do you know a good Sales Manager?

Over the last 9 years of running the Churchill Club I noticed that every time we have an event with a sales and marketing focus, someone asks me that question afterwards. They sidle up beside me and pretty much use these exact words every time “So, do you know any good sales managers?”

Sales ManagerThe person asking the question is normally the founder / CEO of a small but growing innovative business. They wanted to grow faster by professionalising their sales and marketing activity or address at plateauing of sales. First stop is that they employ a Sales Manager who is very impressive. Around 6 months later they fire them for having no impact. They then repeat this cycle a couple of times hiring and firing, until they eventually ask me the questions “So…..”

So why does this pattern repeat itself? Lets set the scene……

  1. The CEO has traditionally generated business out of his/her own networks. Normally they have a strong background on the tools (whether it be tech, science, serving ice cream whatever)…They are well respected for being good at their job and consequently get plenty of business referred.
  2. Its easy for them to sell, because they are “the man” the person who can make a decision immediately, answer any question and fix a price or discount on the spot.
  3. They don’t particularly need professionalism of their sales and marketing activity, because new business effortlessly and regularly  arrives.
  4. Their business booms for a while (normally for around two years) before they start to run out of opportunity in their own network, which is when they decide to employ a Sales Manager.

Here’s what happens next…

  1. The Sales Manager gets the job because he or she is good at selling (themeslves to you). They have probably worked in the industry before and somehow connect with the CEO. They have previously held roles as a “Sales Manager” which you don’t yet realize is meaningless, because pretty much every salesman in existence has held the title “Sales Manager” but not done the job.  The difference between selling and managing sales is vast, but its confused by the fact that Sales Managers are usually a senior salesperson as well.
  2. Turns out that they are also poor pick for the job – because of you.  You don’t know what should be in their job description other than “sell stuff”, so you can’t recruit effectively.  Secondly if they are currently working for a competitor or similar business, you probably don’t uncover the real reason they want to join your business (which won’t be a payrise for them).   Hint – they are probably about to get fired!
  3. The new Sales Manager is not completely incompetent though – but then they find there is pretty much no sales and marketing infrastructure in place and your “hundreds of customers” is usually just a debtors ledger listing of 50 businesses that may or may not exist anymore.  Lots of hard work ahead for them.
  4. The Sales Manager is out of their depth because they just know how to sell but the job requires more.  There is no guidance from you, because it’s the blind leading the blind. They then spend a lot of their time out of the office “building a pipeline”. You don’t have formal sales meeting because you don’t know what to do and what to measure. You just occasionally ask “What’s going on?”
  5. You gradually become more and more nervous that you have picked badly. You barely see the Sales Manager because they are always out and your suspicion is that they may be going to Job interviews.
  6. You start undermining them by handling incoming requests yourself, as you no longer trust them to build your business.
  7. They then quit just before you sack them and blame you, bad mouthing your company as being “about to fail”.
  8. The cycle then repeats a couple of times because you think the problem was caused by you recruiting badly.

You then whisper in my ear “So……………”.

The real question you should ask though “is how do I get out of this cycle?”

Firstly you need to accept you don’t need to recruit a Sales Manager yet because you are it and will be it for a while  (don’t abdicate this role).  You do however  need a system, then a salesman you can manage, then replace yourself as sales manager when you validate your arrangements work. The system for selling could include:

A simple Strategic Marketing Plan – i.e. What you selling, who do you sell to, and why do they buy it? You will also know the way to find, sell and deliver (channels) to these people and what the market looks like you operate in. This however can start as a single paragraph that you improve and expand every time you revisit it.  It is your compass.

A simple Tactical Marketing plan. – ie. How you will generate leads, generate prospects, close customers, fulfill orders and account manage each of your solutions listed in the Strategic Marketing plan. This will hopefully have some nice measurable metrics and a budget attached (even if the budget is simply an apportioning of someone’s time ).  Its the framework for managing salesperson activity to deliver sales (the core of sales management).

Some Sales & Marketing Infrastructure should be put in place– Sales Collateral, contracts, website, reports, perhaps even a CRM system that actually has customer information.  The tools your sales people use to do their job.

A simple Job Description for a Salesperson  detailing what you want the Salesperson  to do. You should combine this with the metrics you will measure and judge them on. Eg. Perhaps they need to do 10 new business meetings a week.

You are then ready to recruit your first salesperson. Once you have a sales person, setup a weekly meeting with them because you are “The Sales Manager”. Don’t abdicate this role. You need to manage your sales person by gaining regular insight their performance (against the metrics), problem solve and innovate to ensure their success. When the sales person is successful, split the work and employ another.

Write up what you are doing as the Sales Manager as a Job Description.  You will need it for when you are ready to employ your replacement Sales Manager. The one that will be a highly effective and valued member of the team because; they know what to do, they are the right person for the job, and have the right resources.

Not that hard I think, but not much fun to learn the hard way.  If you can’t do it, help from someone who can.

sales, marketing, processes and lemmings

A popular misconception about Lemmings is that every once and a while, they all suddenly run off a cliff and commit suicide. Unfortunately, its not a misconception when talking about sales & marketing processes in a professional services environment.

As I’ve mentioned before, in any organisation, there is generally only 6 core Tactical Sales & Marketing activities. ie.

  1. Generate Leads
  2. Qualify Prospects
  3. Close Customers
  4. Delivery
  5. Account Management
  6. Analysis

Knowing this makes life fairly easy as you can then measure not only the effectiveness of each activity in your pipeline, but how the activities are connected.

I say this because the most common problems I see in organisations is the disconnect between the separate activities. I.e. one process doesn’t automatically handover to the next. eg.

  • Leads being generated, then not being qualified.
  • Prospects being identified, but not being sold to.
  • Sales been closed, but services not being delivered.

I was once involved in a campaign where we delivered qualified prospects to a car yard. People that were in the market for a new car and wished to test drive the model. The initial campaign failed as the sales team was hesitant to call the prospects “as they may have changed their mind, and that would be depressing”. Note the campaign was saved by changing our process to finish with a booked test drive, rather than just contact details of a hot prospect.

Recently I ran a new client engagement campaign for a professional services organisations. After running a series of events in an agenda, I found that the main sales person, who was also the CEO, was simply too busy to do anything with the new relationships we had developed.

Sadly, I can’t see this issue changing as the sales and marketing function of most professional services organisations never gets the focus it deserves, and as people are turned over, the lessons will be there to be learnt again and again. Like Lemmings, almost.

Ignoring your emails

Everyday I ignore your emails.

Everyday I receive around 100 emails to my newsletter mailbox. I sign up for anything that takes my fancy, but mostly around technology, innovation and entrepreneurship, but occasionally around personal interests such as kayaking and food. At the end of the workday, I browse the newsletter mailbox fairly quickly, to see if anything that has come in that interests me.

Because there is a lot of emails,with a lot of overlap in content, I only read the Subject line, before moving on. So which of these email’s do you think I read?

Sourcebottle Alert 25 July 2011

ScienceAlert-Latest Stories

or

Turbo-charge your team’s performance, Another clean tech collapse, HIA warns on contractor crackdown, Aconex and Baillieu family in court fight

Obvious isn’t it. Note the second one is from Smartcompany!

So here’s some tips…

  1. You don’t need to have the sender name in the subject line, because almost everyone configures their email client to show who the email is from.
  2. You don’t need to have the date in the subject line, because almost everyone configures their email client to show the date of the email.
  3. You don’t need to have volume, issue no. etc in the subject line, because the only person that cares is you, and you’re not the audience!
  4. You need to have a catchy headline about why I should read the content as my attention span is short and you have lot of competition.

So really, don’t put lots of effort into constructing your content if you are going to bugger up the execution. You’re wasting lots of your time, but almost none of mine.

wanna get lucky?

So at a recent Churchill Club function in our Innovation thinking stream, we ran fascinating event Luck. As part of the panel, we brought up a chap called Jason Bresnehan from Tasmania to talk. Jason is a corporate advisor who last year decided to start writing articles about becoming luckier.

Jason had started to wonder about phrases like “I was in the right place at the right time”. Specifically he was wondering whether he could increase his chances of “being in the right place at the right time” and so began his research on the pursuit of luck.

Jason felt you get lucky when 4 elements align themselves:

  1. A random collision of life’s interactions presents an opportunity to you.
  2. You are prepared to act upon the opportunity that has presented itself.
  3. Your character is such that you are empowered and willing to act to exploit the opportunity
  4. Your systems and techniques are ready to enable you to exploit opportunities efficiently while mitigating risk

But what does this mean on a day to day basis? Here’s some of Jason’s suggestions.

  1. Taking action to interact more with life and forcing more random collisions – such as trying crazy things, change your routines, do crazy stuff and just get out there. This will increase both the quantity and quality of opportunities in your life.
  2. Act to change your brain, so you notice the opportunities in your life and change the way you think about them. Learning new skills, opens up new neural pathways. Force change into your life so you you have to cope with doing new things. Don’t accept the status quo, even if its simple routines such as where you park your car.
  3. Be prepared to exploit the opportunities that random collisions throw your way. This may include conducting research without acting on it yet, creating a financial reserve or allocating time to explore lucky outcomes.
  4. Build your character so that you willingly and fearlessly act to exploit opportunities. Try new things such as skydiving or acting to overcome your fear of failure and embarrassment.
  5. Creating systems and techniques that create efficiency and risk mitigation when you explore opportunities, such as; KISS – Keep in Simple Stupid, take a portfolio approach to risk, or locking yourself in to a break even/small win strategy rather than big win/big lose strategy.

Weirdly, I started feeling luckier just by writing this article.

Dont go to networking events, if you want to build a great network

NetworkingThe two weeks or so ago I took part in a panel session on Networking for CIOs. It was an interesting conversation although it pretty much centred around event attendance and using social networking tools like LinkedIn. At the end of the session, as I reflected on what  had come out of it, I was surprised to find that the concept of “networking events” continues to be appealing to many people.

I find networking events quite pointless and in fact a little unsavoury, and thought I should  put up some arguments to why they are a waste of time time anyone looking to build a great business network.

The Quality of the Network

A great business network isn’t necessarily a large one, but it is full of people that are shaping their own worlds.

1. People with issues that need solving in their business, have no motivation to attend networking events – instead they attend knowledge based events to help them find solutions. To them, networking could be a bonus, not the point of attending. My experience is that networking events are overwhelmingly attended by people with a “supplier” mindset, not “customer”. So you are unlikely to make interesting connections.

2. I have never met a senior executive or person of profile at a networking event, other than when they were presenting. Networking events are almost exclusively attended by very junior people. Since I have never met anybody that wanted to network down, rather than with peers or upwards, you have got to ask yourself “Will I meet the CEO there, or just junior sales staff?”

3. The most interesting and valuable opportunities I have ever come across have been with people completely outside my own area of activity. If you are an Accountant, who only ever turns up to Accounting industry networking events, exactly who do you think you are going to meet?

Your Value & Mindshare

A great business network is two sided. You value people in it as much as they value you.

4. I own two shovels that are identical, because I forgot I already owned one when I needed a shovel. So a great networking connection is one where who you are and your value gets remembered the next day. Unfortunately networking events rarely generate that type of connection as the purpose is to meet as many people as possible – so that you increase your chances of getting lucky and finding an opportunity.

5. Networking events also tend to be very industry or location specific so that your own value proposition tends to get hidden in the white noise of the event. For instance would you rather be an lawyer at a legal function, or a lawyer at an event full of multimedia people looking to expand overseas?

Attributes of the Secondary Network

A great business network connects you to other great networks.

6. Just working a room looking for opportunities is a completely soulless activity. But not only that, it also means that you may miss out out on tapping into the networks of the people you meet. Something that’s wonderful to hear is “I need to introduce you to a friend of mine”. Those words don’t get spoken at networking events, because everybody is just to focussed on pushing their own message and desperately hoping for a win.

So my argument is that if you want to build a great business network, attend events from different disciplines where knowledge transfer is the primary goal, not just networking. Not only is it more effective, but a much more palatable way to live your life.

6 tips for “un-networking”

Imagine this scenario….

  • You go to a networking event, hovering at the edges of the crowd , desperately searching for someone you know, so you can chat and relax.
  • Succumbing to the pressure to “network” you give up and introduce yourself to a nearby stranger, who is also standing by themselves.
  • To your disappointment your realise that they are not going to be interesting to you professionally.
  • To your horror you realise that the reason they were standing by themselves is that they lack social skills / basic hygiene / sanity.
  • And with a sinking feeling of absolute failure and desolation, you then realise that they aren’t going to let you go, now that they have made a “friend”.

This was one of the situations I was thinking about when I was interviewed by Mark Jones of the Financial Review for his Scoop podcast last week. Although the discussion was primarily around networking for CIO’s, I thought it would also be useful to talk about some techniques for “un-networking” or disengaging with people at networking events.

Since at networking type events you need to kiss a lot of frogs, I thought I’d share six tips on disengaging that I regularly use.

  1. Take the cowards way out – excuse yourself and go to the loo/bar/table with canape (you know you can easily do dinner on canape at networking events!).
  2. Hold off giving your business card to the end of the conversation because giving business cards can be used as a natural ending. “Great to meet you, here’s my card, call me if you need my services”.
  3. Invite any additional “singles” around you into your group, so when you disengage, there isn’t an awkward “I’m dumping you” moment.
  4. Merge your group with another group. Everyone at the event is their to meet new people, despite the fact they may be standing in closed circle with their backs out. Although it feels uncomfortable, I have never ever been knocked back when I have asked “Can we join you?”
  5. Keep looking over the the crowd to find someone you know that either a.) should meet your new friend , or b.) you feel like shafting. Drag your new “friend” over and introduce them, then depart gracefully.
  6. Avoid the person that has poor dress sense, has sweaty hair plastered down on their head and is standing by themselves. Its highly likely that they will “lock on” to you making it difficult to escape. In my experience they will try to follow you to the loo/bar/table with canape.

Having to regularly “work the crowd” at Churchill Club events I have found that all of these tips work, and become easier with practice. This isn’t a comprehensive list though, so if you have any more ideas, I’d love to know.

Does Commission Only sales actually work?

Quite regularly I get offered  commission only sales work.  Rarely though its ever phrased that way.  Normally its a discussion about how exciting and lucrative the opportunity is with a statement at the end like “we don’t pay retainers though”.  Instead there is a discussion around “spotters fees”, “trailing revenues”, “your margin” or being “looked after”.

For me its not normally just  products or multi-level marketing schemes, its about larger transactions eg “sell my business” or “can you get some serious money involved”.

Commission only has been around for along time, however I believe it has gained transaction in the last  decade or so the rise of business schools has communicated the message that its a cheap, low risk way of gaining sales.  In some cases it has been highly successful, for instance selling Encyclopaedia’s.  But like most things in life the multitude of failures are hidden from us as we celebrate the lone success.

So When does it work?

There are three situations, or combination of situations where Commission Only sales seems to work well.

  1. When the product is easy to sell, commission only provides a way for the salesman to maximise his earnings.      I have a friends that sells advertising on a commission only basis, when his peers have a base combined with a much lower commission.  He chooses commission only as he spends his day working lists of old customers, which have a very high percentage of people that are ready to make a buying decision.
  2. When the “salesperson” is already selling to the target audience and your “product” would simply be layering  on additional revenue with perceived minimal effort.  This option also covers selling though an ad hoc opportunity.  eg I sat next to this guy at lunch and ….
  3. Commission only also seems to work best when their are short sales cycles measured in hours or days.  Long sales cycles cause two issues, first the time investment increases requiring a much greater ROI for the salesperson.  The second issue is the risk  the sale “undermined” by a competition, a member of the same sales team or even the vendor also increases dramatically.

When does it not work

  1. Obviously its not going to work when you get the reverse of the above.  When your product is difficult to sell, when your salespeople have to find brand new customers and when there are long sales cycles.
  2. However it also doesn’t work  when its an excuse to not invest in your  sales activity.  I don’t mean just pay retainers, I mean not even providing adequate training, management and follow up.  All to often Commission only is perceived as a “I’ve got nothing to lose” solution as it costs the vendor almost nothing.  The reality is that it can lull you into a false sense of activity, or worse you can have your brand completely trashed.
  3. It doesn’t work when the agreement is informal, or the audit trail is poor quality.  Both which normally translate into perceived breaches of the agreement, a lack of trust, and sales coming to a standstill.  All to often I see merchant banker types fighting over who was owed the commission on a deal that mutated and had mutltiple parties involved along the route to a transaction.
  4. And finally, it doesn’t work when what each party brings to the table isn’t valued properly by the other party.  For instance I am endlessly approached by people who wish to access my network for free (the one I slaved long and hard to build) and only wish to pay me if they can conclude a transaction – an activity I have no control over.  Another regular theme is that I can have a website built for them at no cost and then make margins from their brilliant product.

A couple of other points to consider:

  • A Commission Only sales force has little interest in providing customer service beyond the sale.
  • The hiring and management of Commission Only staff can can be a huge drain on the management team, as these people are all independent operators.

My point of view is that Commission Only is a great tool and the right tool when used properly.  Mostly though its an ill thought through strategy that is doomed to failure by the “I’ve got nothing to lose” mindset of the vendor.   Am I wrong?

What great questions have you got?

My son, like many children, had his birthday around the cutoff date for entry into Primary school. So my wife and I had a choice “do we send him a little earlier, or a little late.  My position on the matter was “Give me one good reason we should hold him back”. And we couldn’t come up with one.

I then read Malcolm Gladwell’s Outliers which discussed, amongst other things, the correlation between careers as a professional sportsman and birthdates. When I changed the question to “Why would I deliberately make him the smallest, youngest boy in the class?” the answer was obvious.

I realised the truth in the old adage – its not the answer that matters but the question.

Recently I cam across a quote by Henry Ford, which I will come to later, which reminded me how important the question is. So I thought I’d share with you some of the great questions I have come across in start-up and innovative  environments.

1. What would an extraordinary life look like to you?
I find that this question really focuses people on what’s important to them. Nobody chooses a mundane life, it just kind of happens whilst you are busy. For my wife and I its a continuing conversation as its the question that shapes both long term and short term goals.  I also find that it helps founders dream large and set the course for their business.

2. What exactly are you getting out of this?
I love this question.  My friend Fiona Boyd of Collectzing asks this question all the time as not only does it give her insight into other people’s motivations – it also uncovers a whole heap of attributes around the situation that you haven’t considered.   For instance I never would have picked that a slightly complex programme for an international business development visit I have just worked out with a client, was actually all about them making time to catch up with a sibling  that they haven’t seen for years.  It was actually the most important part of the trip for them.

3. Has money actually been spent to solve this problem?
What most aspiring entrepreneurs don’t seem to get is that just because you have a great idea, its not a great business idea unless it has potential customers. The quickest way to figure out whether people will buy your solution is to ask whether they are currently paying money to try and solve this problem in another way. And its not just aspiring entrepreneurs who don’t get it either.  A vast number of Research Agencies (funded by you and me) have IP portfolio’s of solutions nobody actually wants to pay money for. I pretty much see solutions falling into one of 3 categories, of which only the last category makes me happy.

  • Solutions without problems :(
  • Solutions solving a problem :(
  • Solutions solving problems that people will pay real money to fix :)

4. How well does this solve your problem?

This is the Henry Ford question and the basis of being balancing customer focus with innovation based advantage.  If Henry Ford has asked his customers what they wanted – the answer was going to be “faster horses”.  His competitors could also get exactly the same answers and they would all fight it out in the arena of diminishing margins.  But by coming up with innovative solutions, then asking “how well does this solve your problem”, he got to satisfy his customers plus reap the profits of innovation based competitive advantage , or, “he got rich selling factory produced cars, when no one else was doing it”.

So spending time thinking about and refining the questions you need to ask , is time well invested.   The questions determine the answers and choose the direction you take without even being aware of it.

What great questions have you got?