Sales Laundry

Archive for March 6th, 2009

 

When the economy goes sideways and you start to see the revenue generating lot get pink slips, (that would be the sales team to you and me) it is time to go bold before you get bowled.

 

For this conversation, let’s just look at the Top 10% of your sales team.  The Top 10% will not typically get the ax in difficult situations unless one of the following is true:

 

1. The rep was deemed by management to be making too much money.  This is better known as the slice you own nose off to save your face style of management.
2. The reps noise factor outstripped his or her revenue generation potential.  In laymen’s terms the revenue to B.S. ratio was so far out of whack that management took the convenient excuse of a down economy to send you packing.
3. The company’s cash burn rate has far outstripped the amount of checks coming in the door.
4. None of the above.

 

What to do about it:

 

A.      If upper management is giving you the stink eye as they hand you your fat commission check it could be time to do some internal damage control.  If you find yourself in this position it could well be too late to do anything but you gotta give it the ol’ college try.

 

Immediately add a new product to the offerings you sell.  That product being you.  When times get tight and your value is gauged not by your numbers but by the numbers on the P/L it time to refocus your managements attention on what the company is getting for its money.  Why would the company be better off keeping you as an asset rather than cutting you loose?

 

Plan B would be to dust off your resume and start locating key contacts in your network that might be able to save your bacon if you find yourself walking the plank.

 

 

 

B.      In two words…  Shut up.  Keep your opinions to yourself.  If the company is down to eliminating top tier sales guys, additional noise from the sales team is probably not going to be appreciated.

 

Remember what you were like as a new rep.  Before you became a sales god and developed your successful swagger.  Continue to pound out the numbers but with the humble helpful attitude of a new guy.

 

Plan B?  Same as above.

 

 

 

C.      This will be a difficult one to uncover in many cases until it is too late but if this one does rear its ugly head here are some suggestions.

 

1.       Determine the amount of cash flow the company needs to keep the doors open and if you can determine the delta between what is coming in right now and what is needed to survive.

2.       Evaluate your pipeline and forecast from this perspective.  Look at what deals you can bring in or old deals you can help collect on that will bring in the necessary cash flow.

3.       Negotiate quick pay terms with your customers in exchange for pricing discounts (assuming mgmt approves, of course) for the deals you do get done.

4.       Evaluate your product portfolio and look for the products with the shortest sales cycles that can generate cash flow for the company.

5.       Look for additional products/services outside your present lineup that fits the existing company skill set and customer base.  

 

 

D.         In this instance who knows why things are going sideways, but clearly something is not right. 

 

1.       You could offer to defer some percentage of commissions to a future date. (However you may never see that money again if you company blows up!)

2.       Trade cash for non-cash or delayed cost perks that may ease some of the strain on cash flow to meet Friday’s payroll.  (Healthcare, stock options, etc.)

 

 

Many of these things you are not going to be able to execute as an individual sales rep, but this should give you some ideas to go to your Sales Manager/VP of Sales with to try and work through the difficult situation.

 

Hopefully you will not find yourself in this situation.  Just remember to keep an exit strategy in place for yourself and those you care for.  The mortgage and the car notes will still need to be paid and your family will still have to eat.

 

My first official outside job as an account manager began with an immediate wake up call.  I was walked to my new cubicle and directed to have a seat. 

 “Here is your phone.”

 

My new boss looked at me, smiled, nodded his head and pointed to a standard beige 12 button hotel phone.

 “There are your leads.”

 

He said, pointing to a phone book.

 “Keep track of everything and write your proposals on that.  They should have it working later today.”

 He said, pointing to a PC on my desk.

 With that he was gone and my sales career as an account manager was launched.

 I had exactly no idea who I should call or for that matter what I should say if someone answered the phone, except that I was selling computer networking equipment and services.

 At that point I made the single smartest decision a young account manager can make. 

 I flipped the phone book open to a random page, found the first listing and started dialing.

 At that point, not realizing it, I made my first mistake as a young account manager as well.

 My random page selection had me cold calling bail bond companies to make my technology fortune.

 Several calls and an appointment or two later, I learned my first lesson, that bail bond companies were not part of our target market.

 The point is do not let the fear of failure or the fear of not having 100% of the details stop you from swinging for the fences.

 You ARE going to fail sometimes.  You ARE going to get asked a question you do not have an answer to.  If you are in this business any time at all, trust me on this, it is going to happen.

 Don’t fear failure, accept it.   Accept it not because I said it or because it is an old sales adage, accept it because it is as much a part of the business as the shoes on your feet.

 New guys call their mistakes failure and get all upset. 

 I call my mistakes experience.  I learn from them and leave the new guys asking “How did he know to do that?” the next time the scenario presents itself, as it almost always does, again. 

 

I have literally taught hundreds of people “how to sell” over the years, but I still find myself amazed because selling is one of the first things we put into practice as a baby.

 

Several years my very young daughter reminded me of that fact at a well placed moment in time when I thought I was a master sales trainer, having just helped a young man close a sale that only a few months before he and I both would have said was impossible.  I should clarify that in saying I gave some instruction, but he did the heavy lifting in front of the customer.

 

Arriving home, swelled with the pride of a father who just watched his son achieve his goal and feeling pretty good about myself my wife brought me back to earth by asking me to feed my little girl (and clean up after the food stopped flying.)

 

Knocked from my high horse, I set about putting my daughter in her high chair and inspecting the nights fare.  There was some sort of green glop next to some brown glop next to the only thing I recognized on the plate, which was apple sauce.

 

Ever the dutiful father, I scooped up some of the brown stuff, opened my mouth wide, trying to coax my daughter to do the same and inched the spoon forward.

 

She was smiley and happy to see her daddy.  She was hungry and ready to eat.  In went the spoon and a trained hand maneuver later the spoon was out, clean as a whistle and ready for another dose of the brown stuff.

 

My daughter’s face was telling a different story.  Her little face was scrunched up and then she was holding her mouth half open like she was undecided as to what to do with the glop in her mouth.  All the while she was looking at me like I had betrayed her or at the very least put a beat down on her favorite teddy.

 

Then, as quick as it went in, Pluuuaaahuha, it was out with amazing velocity and residing on me.

 

OK, that went well.

 

“Let’s try the green stuff.  Yeah, that looks yummy.” I said, or something like it I am sure as I crept ever closer with the spoon.

 

My daughter, now not so trusting, but hungry none the less, looked at me much more suspiciously and only half heartedly opened her mouth.

 

I saw my opening and took it.  In went the green stuff, but the spoon was barely out of her mouth when the green stuff, now mixed with baby slobber, came flying back out at a speed close to the sound barrier I am sure.  This time I jumped to safety and let my chair take the split pea carpet bombing intended for me.

 

Cleaning the chair up, I soldiered on, this time with the apple sauce.

 

My daughter looked at me with complete distrust in her eyes.  Nope, not going to open up, no way.  I had to resort to a face she loved to make her giggle, then, like lighting, I was in there with the spoon, back out and under the table waiting for the fruit fallout.

 

Then nothing.  Just baby noises.  Peaking out, she looked at me like “Hey Dad, how about some more of that stuff?” bouncing back and forth in her seat, visibly excited.

 

“Well, one more bite of apple sauce, that won’t hurt anybody.”  So, in went another bite of applesauce and more happy bouncing and happy baby clapping commenced.

 

I was a hero again, so I thought I would test that new goodwill with a quick shot of the brown stuff.

 

As soon as I got close with that spoon, the nose wrinkled and she started breathing in and out of her nose like a hand air pump filling up a bicycle tire.

 

It seems she had already equated brown with bad and it was the same for green I soon discovered, but yellow…

 

Yellow… big bright eyes, a smiley face, nearing hyperventilation. I realized my daughter was exhibiting a sales skill that Madison Avenue has mastered but that your average Joe Salesguy misses entirely.

 

The lesson?

 

Selling something is more often about what the person doing the buying is going to get out of it, not a feature set.  It is about explaining how they are going to feel or be better off if only they have your product.  Most of the time a new sales guy will simply and sheepishly rattle off a bunch of product features and smile awkwardly at the strange silence when he suddenly realizes he has nothing left to say.

 

Madison Avenue, or the commercials they come up with, rarely sell you on features of the product, almost all of the time is spent telling you how you are going to feel or by showing you images they want you to associate with the product/brand.

 

Coke doesn’t sell itself as brown sugar water with high fructose corn syrup, the message is you will be refreshed, you will be so happy you will want to buy a candle and stand on a hill somewhere singing “I would like to teach the world to sing.”

 

What I thought I had done such a good job teaching, my daughter demonstrated a mastery of while still filling up her Pampers with the “other” brown stuff.

 

My daughter’s version was a little more direct.

 

Brown stuff in, yuck, bad daddy, you should feel terrible for subjecting a defenseless baby to that yucky stuff.

 

Yellow stuff in, yea!  Happy baby, happy daddy, smiling, giggling, clapping, bouncing, all is right with the world and another fairy somewhere gets her wings or something like that.  I feel good.

 

What’s more amazing is she communicated that message without using a single word, just her facial expressions.  OK, and some projectile puree, but you could simply call that a very effective three slide PowerPoint presentation.

 

What happened?  How did that skill get lost in the shuffle of puberty? 

 

More importantly, which one are you?  The Baby or the Bonehead?  Are you selling based on a list of features, or are you selling based on the emotions, concerns, fears, wants and needs of your potential customer?

 

Think about it.  Visualize your product in a 1 minute commercial, how would the boys and girls on Madison Avenue spin your product to convey some sort of buying emotion?

 

If you come up with a commercial, leave me some feedback describing it.  I am still a student of sales, as it is a school you never seem to graduate from.

 

When I began my career in sales I did not know a whole lot about anything, but in the process of refining my sales skills I learned a little bit about a lot of things.

 

As part of the rapport building, or the getting to know one another phase in any sales process I always found myself asking about the interests of the person I was talking to based on what was on display around their office.

 I have participated in sales training seminars and events over the years where they equate this practice with greasy slime ball sales guys.

 

I have never received any negative responses from my prospects or client base and I think it was because I was truly interested in what they were up to. 

 Some view this small talk as a necessary evil to be endured until there is an opportunity to whack the prospect over the head with the latest whiz bang features built into their products.

 

I have learned over the years that the more I understand how and what a prospect or client thinks about the better I am at helping them arrive at solutions that work (both politically and technically.) 

I call the process 360 Prospecting as in understanding the 360 degrees that make up a potential customer.

 

As my degree of understanding a given prospect increases, so does my likelihood of closing the prospective deal, and the less likely the prospect will do a 180 and leave me with a big ol’ bag of nothing.

 Try it yourself.  Learn something new about every client or prospect you meet.  Best case you close a few more deals, learn a few funny stories, and will be much more fun at parties.  Worst case the meeting ends and you realize you have done nothing go over the features and benefits of your best Ronco Pocket Fisherman stories.

Are you swinging a sledge hammer to kill an ant in your sales organization or are you taking a fly swatter to a tank battle?

Better stated, perhaps, have you taken the time to calculate the costs of your various sales tools vs. the revenue potential of your product offerings to make sure you have a sales strategy that makes sense?

When I am evaluating sales management and their sales organizations this is one of the first key metrics I look at to determine if sales resources are allocated properly.

Let’s say you have sales representatives costing you $60,000 in base that have on target earnings at $120,000/yr.

In simple terms, assuming this sales representative is working 40 hours a week (stop laughing!), and has two weeks off a year, he is going to work an average of 2000 hours a year. Doing the simple math, $120,000/2000 hours, this sales representative costs $60 an hour before you factor in benefits, cell phone, car allowance, etc. Let’s estimate his cost at $85 an hour to execute his sales work properly.

Subject Matter Expert: (Could be an engineer, analyst, auditor, etc.) $80k/yr; $80,000/2000 = a cost of $40/hr. We will keep it simple and skip the benefits add on.

Inside sales representative: $40k/yr; $40,000/2000 = a cost of $20/hr skipping the benefits add on here as well.

So let’s look at our costs for these sales representatives and their potential sales tasks.

Site Visit: (Assuming 1 hour of prep, 30 minutes of travel, 1 hour meeting) $212.50 + plus the literature he left, lets call it a cost of $215 for that sales call.

Technical Sales Call (Assumes Subject Matter Expert and Sales Representative) $215 for the representative plus $100 for the SME or a total of $315.

Telephone Call: Inside Sales Representative: (est. 5 minute call) $1.68
Telephone Call: Outside Sales Representative: (est. 5 minute call) $7.10

Mail: Inside Sales Representative: (Lit cost, plus postage plus time) $3.00 for lit + $.40 for postage + $3.00 worth of time.

Etc. etc. etc. You get the picture.

Now take these costs and apply them to the products you are selling and the revenue they produce in general terms.

When I do this I am mentally asking myself what is the most cost effective method of sales for this offering (that is not going to negatively impact customer service.)

I have seen situations where entire outside sales organizations were in danger of being fired and replaced because they were not hitting their quotas. After analyzing what they were being asked to sell vs. revenues generated it became clear that the company was swinging a sledge hammer (or using their most powerful/expensive form of sales) to kill a fly (some of their least profitable more commoditized offerings.)

The obverse is true as well.  I have seen inside sales teams and telemarketers trying to sell solutions that were far too complex for the tools available to make the sale.

In many cases I have been able to lower the cost of sales by making these kinds of changes and making individual groups (inside sales, outside teams, etc.) more efficient and more profitable as a result.

Every sales representative needs to have the ability to wade into an unknown situation with some confidence when all the facts and details are not available to take advantage of opportunities that develop out of no where.

 In short everyone in sales should have some skill at winging it.

 Let me clarify that by “winging it” I am not talking about creatively lying on the fly or just flat out making things up.  That would destroy your credibility and sooner or later, your career.

 I am, however, talking about two important factors that in my humble opinion give you the best opportunity to wing it when you have to.

 

1. Knowledge.  You can’t wing what you don’t know.  You need to develop a complete understanding of your products features, capabilities, AND be able to apply those to real life problems your prospects face.  I as a customer could care less that your product is 20% faster this year unless you can explain to me how my business is going to be appreciably better with your new whiz bang super speedy device.
2. The ability to Speak on Your Feet.  You have got to be comfortable being able to communicate with any one any where at any time.  If you are fearful, or caught up in the mechanics of how to speak, you will not have enough brain power left to figure out what to say.  If you acquire the ability to speak confidently then you will not have to focus on how to’s of speaking but instead focus on what you are going to say.

 

 Research I have read suggests that the fear of public speaking, or Glossophobia, is the number one global fear.

 Some try hypnosis, some try beta blockers though I have no idea why, some try self help books.  My recommendation would be to just practice speaking.  Join Toastmasters in your area or a community group that will force you to speak.

 While some of these methods may work very well, I have a hard time believing that you will get better at speaking without, you know, actually speaking!  Even if it is only to yourself in the mirror.

 But I digress.  The ability to recognize an opportunity for your product or offering and just wade in throwing caution to the wind and “wing-it” will serve you well in a sales career and from my experience, serve you well in almost every other aspect of your life when it is time to speak up.

On a nice evening out for dinner with my wife we were seated at a great table in an upscale Italian restaurant.  

 A manager stopped by our table and welcomed us to the restaurant and asked us if we would like to start off with a bottle of wine.  My wife was looking at the wine list and thought a bottle of her preferred wine was too expensive, so she ordered a glass.  

 The manager asked if I would like a glass, I had not thought about it, but said “Yes.”

 

“You might consider ordering a bottle, sir, if either of you would like a second glass the bottle would be a better value.”  The manager said.

 My wife smiled and very quickly nodded to the affirmative that ordering a bottle was a good idea.  I ordered it even though not three minutes before my wife had considered the bottle too expensive.

 

The price was a barrier until the value the bottle represented was elegantly explained.  With a value statement, the manager successfully bridged the gap between the perceived cost and actual cost of that bottle of wine, altering the perception and effectively closing the deal.

 The restaurant was beautiful.  The lights were dimmed a bit.  Fresh aromatic bread was on the table as was a special oil and garlic mixture for dipping.  We both ate the delicious bread, dipping it into the oil as we went over our respective menus.

 My wife decided before we had even arrived that she wanted some sort of lobster pasta dish.  Sure enough, she found what she wanted, but was put off by the price.  She decided to go with her second choice.  Seeing that we had put our menus away, our waitress stopped by asking if we were ready to order.

 I asked about a special couples promotion I had heard on the radio the restaurant was running but the waitress did not know what I was talking about.  The manager, however, just arriving with our bottle of wine overheard the conversation and verified the promotion and happened to toss in that the lobster pasta dish was part of the promotion, having no idea that was what my wife was really wanted.

 My wife, smiling ear to ear, ordered her pasta dish, I forget what I ordered.

 The restaurant was still beautiful and my wife was thrilled, which in turn made me happy.  She got a reasonable value on the wine she loved, she ordered her entre of choice, and the restaurant staff was on top of everything.

  Soon the bottle of wine was delivered and out waitress placed our empty crystal wine glasses on the table and set about opening the bottle.  She poured two glasses with a bottle roll at the end and confidently plopped the bottle on the table stating out entrées would be out in just a few moments.  A bite or two of the fantastic bread later, we picked up our wine glasses to toast the occasion.  The evening progressed with a good meal, great conversation, a nice desert, I paid and we left.  

The marketing dollars spent and the message delivered was a perfect compliment to the sales experience on the restaurant floor.  The marketing dollar found its target market in me, the message compelled me to action and the sales team at the restaurant was delivering on that implied promise, providing an experience for me and my wife I was willing to pay for.

Corporate direction, to raise average tickets by getting more couples in the restaurant, was perfectly in line with Marketing, having put together an attractive targeted promotion that got us in the restaurant, and Sales completed the trifecta by delivering quality service and tacking wine and desert on our final bill.  

This was a perfect case study in what can happen when Management, Marketing and Sales are all on the same page, out of their respective silos, and delivering a consistent message from the top down.

Look at your own company.  Does your stated corporate direction match what your Marketing department is doing?  Is the Sales department in line or are they marching to their own drum?  If not, then your company is probably paying too much for each sale.  From a numbers perspective it probably looks like there are too many sales people on the payroll for the amount of revenue being generated. 

The good news is it should be easy to find some sales improvement just by getting everyone on the same page and some additional improvement yet again,  from my experience, once you all get good at working together.