Sales Laundry

Archive for the ‘Sales Management’ Category

What is your competitive advantage?

I love that question because it gives me an immediate understanding of a sales reps grasp of their own offerings and provides a small perspective into their understanding of their competitors.

The answer to that question can be key in some cases in determining the reasons for the success or failure of an individual sales rep or an entire sales team.

Let’s take an example from the oft in the news automobile industry. I will qualify all of this by saying I do not and have not ever sold cars. This is an example to illustrate a point.

If I only sold new Ford F150 pickups I would consider it critical to my success to understand everything I could about feature packages, engine choices, trim levels and available options so I could match the needs of my prospective client with the best combination of features that would serve his needs and what I had on the lot.

I would also want to understand what I had in inventory, what my competitors have, and what I could get my hands on in a reasonable amount of time to satisfy a customer request.

Next, for me, would be to talk to my service department and get an understanding of the vehicle from a service perspective. What parts tend to break more often? What should my client keep an eye on to avoid costly repairs? Are there any specific problems with certain engines, transmissions or trim levels?

I would also study the commercials to understand what the Ford marketing department is hanging its hat on when trying to entice the consumer to buy their trucks. Where it makes sense, I would blend their message with mine to leverage the ground work Ford has already done.

I would also need to know why my new F150 and the depreciation it would take as soon as it rolled off the lot was a better value for my customer than last years model, or any other used Ford truck still on the road. If I only sell new Ford trucks then a used Ford F150 is every bit as strong a competitor as a Chevrolet, Toyota, Nissan or GMC.

Where, when and why is my new F150 a better value than my competitors’ vehicles. To understand that, I would need as much knowledge about my competitors new trucks as I know about my own, including their used models as well.

Amassing and internalizing all of this information amounts to what could be a strong value add for my prospective truck customer. Even the ones showing up fully armed with internet research.

The more information I have at my disposal to answer questions and eliminate the need for my client to go look somewhere else, the more likely I am to sell a truck.

There are several other factors that go into being a successful rep that I glossed over. Here I am speaking specifically about leveraging what you know into dough.

I ask again, what is your competitive advantage?

Why should I buy your product over your competitors? What value do YOU bring as the representative? Why should I buy my widget from you instead of number one sales guy Dave over there?

Make it easy for me to buy, help me understand the value you bring, and why I should buy from you vs. your competitor and odds are, assuming I believe you and recognize your value, I will buy from you, all other things being equal.

Chinese general Sun Tzu, living some 2,400 years ago, give or take, put it a little differently…

If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.
- Sun Tzu

Or perhaps more concisely put…

Keep your friends close, and your enemies closer.
- Sun-Tzu

image provided by theblogentrepreneur.com

Several years ago, on one of my account calls I got an opportunity to tour the Kansas City General Motors plant. Trains brought raw steel in one end of the plant and through a maze of conveyors, yellow robots, and factory workers 95 new cars an hour rolled out the other end.

To me there are a lot of similarities between a manufacturing facility and a sales organization. Just like an assembly line, sales is a process that takes time to ramp up, to develop skills, time to develop relationships, and time to begin to deliver forecasted business.

From a standing start it can be painful to get sales teams in place and productive, but once the momentum turns in your favor a seasoned sales team can be a revenue generating fire hose. Just point, hang on, and let err rip!

For every management team out there with a sales cycle of any length, look at your sales team as a manufacturing facility and each rep as a little sales factory.

Sales factories do not need typically need much in the way of resources to be successful, but with some attention in some key areas, efficiency can be dramatically increased.

1. Sales needs raw materials in the form of leads. You can ask the sales factories to generate their own leads but understand that time unloading the train cars means less time being spent sending products out the door.

2. Tie marketing resources directly to sales efforts. Build email, direct mail, web, client testimonial videos and any other form of make sense marketing that will help the sales factories churn out revenue. The key here is to make sure the marketing message and the message the sales team is sending is at the very least the same and hopefully wildly complimentary of one another.

It would be a mistake to think of every marketing dollar spent as a dollar wasted. Marketing and advertising expenses, in some instances, can be directly offset by a reduction in the real cost of acquiring a new client by the sales department.

3. Analyze the activities of your sales team. Identify the non/low revenue generating activities that can be eliminated, ones that can be retasked to a more cost effective sales resource, or automated altogether.

For example, in one sales organization I noticed we were spending $27 on every email being sent by one particular rep.

Each email was extensively thought out with key phrases chosen beautifully but it was taking him over 30 minutes to craft each unique email.

Taking a step back and looking across the entire team, I found we were massively duplicating our efforts crafting emails. The messages were unique to the rep writing them, off message, and collectively eating 20% of almost every sales day, touching a painfully small portion of the market base.

The solution was to look at our outgoing emails, evaluate what the team was spending 80% of their time trying to communicate and crafting a variety of templates that were on message, could be personalized, and met with the approval of the sales team. Simple stuff, but that move effectively added half a sales rep to the team in terms of time and sales for nothing.

Look at your sales organization like it is an assembly line; make sure that internal processes and or inadvertent obstacles are not impacting your sales team’s acquisition of leads or the sales they are cranking out.

The last and most important thing I can say is do not do this in a vacuum.

Engage your sales team, solicit their feedback. Effective ways to get more sales are in their best interest as well. 

 

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.

 

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.

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.