Sales Laundry

Posts Tagged ‘diagnosing problems’

Q&A’s are excerpts of questions I have answered as part of Sales Laundry or other forums that I am apart of. If there is a relevant sales message for the masses I post it here to share, gather feedback and discuss.

Q: What do you do when your client tells you that your proposal is twice the price of your nearest competitor?  My client just called me and told me that my quote was 2X more expensive than the highest bid received from other companies.  What do I do next?

A: First, don’t panic.

At least your client is talking to you.  They could have just as easily thrown your proposal in the trash and never contacted you.

This could just be a ploy by your client to get you to lower your price or it could be a legitimate question about why your price is so high.  Either way, your next move is to contact the client as soon as possible.

Your client is theoretically trying to make the best decision possible for their business and that is how you should approach this problem as well.  Be a resource to truly help them figure out the best course of action.

If your price is 2X your nearest competitor, either:

A.  You misunderstood the requirements.
B.  Everyone misunderstood the requirements except you.
C.  You are offering something of additional value that your competitors are not offering.
D.  You are priced too high for your market.

If you have a great relationship with your client, I would ask to meet with them and help them compare the competitors proposal to your own to make sure it is a fair comparison.

I would do the following:

1.  Review the specific issues that the client said was important to have addressed in the proposal.  If you can get the client to rank the issues in order of importance, that would be even better. (See point #8.)

Doing this exercise should tell you if you and your client are in agreement on what all of their issues are that should be addressed in the proposal and help you identify if the problem with your client is A, B or C above.

2.  If you have a unique service or offering that would be of value to your client that your competitor is not capable of matching, you can try to get that service included on the “important issues to address” list, though you should have done this the first time around.  I would just say make sure you keep your clients best interests in mind when making this decision.

3.  Once you are certain you and your client are in agreement on what issues need to be addressed in the proposal, ask to review the quotes.

4.  Compare your quote and the competitors quote to the ranked list of issues and point out the specific spots where the proposals differ from each other or the list.

5. If you have addressed issues in your proposal not on the list or that the client does not want it is up to you to offer to remove the item or convince the client that they need it and to pay the additional cost associated with it.

6. If your proposal has addressed everything on the list, but your competitors proposal has not, ask the client if the item the competitor left off is important.  If it is important, the competitor needs to add it, if it is not truly important, take that item off your proposal and adjust the price accordingly.

7.  If your competitor has offered a very low price to get the business that you do not think they can honor, explain your concern to the customer and offer a fixed price or a guarantee to meet the price you quoted to eliminate the advantage such a tactic might give your competitor.

8.  If the client did rank their issues in order of importance and price seems to be their ultimate concern, you might offer to remove the lowest ranking issues from the proposal and reduce your price accordingly.

9.  OPTION: Offer up a discount/rebate or refund if you are wrong.  You could offer to charge a lower rate if your actual costs are lower than what you are predicting in your proposal.

Good luck!

Reading the book The Servant: A Simple Story About the True Essence of Leadership, by James Hunter this past weekend, I ran across two simple company organization charts that brought me back to a previous post on customer service and posed an interesting question I want to get your thoughts on.

Who do we really serve in our businesses?

A current trend in sales organization design is to be customer centric.  The customer centric sales model puts the customer at the center of the sales process in an effort to align customers’ needs and buying preferences with the way we design our sales tools and create value.

Add this to our “quality customer service” initiatives, “the customer is always right” statements, and customer service surveys that were once rare, but now seem to have attached themselves via URL to the bottom of every major grocer, retailer and restaurant chain’s receipts in recent memory.

All of this makes sense to me, especially today when it has become clear the power of knowledge once wielded by sales teams has shifted decidedly in favor of the customer researching via the Internet.  Coupled with that, customers continue to benefit from splintered product categories offering more product choices, wider selections, and more competitors fighting for dollars.

On this information alone I would have declared the customer “King”, but then I saw this:

It looks to me like to a large extent our Employees are serving our Supervisors who are serving our Middle Managers who are serving our Vice Presidents, who are serving the CEO, who is presumably serving the Board and the shareholders/investors.  The remarkable part is, by design, either everyone has their back to the customer or the customer is actually supposed to serve the company!

If customers are truly our focus, or as a corollary, if we should focus on serving our employees so that they will serve our customers, shouldn’t the model look more like this?

With this model, the CEO serves his customers, the Vice Presidents, who are in turn serving the Middle Managers, serving Supervisors who are focused on the health and wellbeing of the Employees so they can give their undivided attention to serving the Customer.

 It was wisely said a long time ago that a man cannot serve two masters.  So who do you serve?

 Are we serving the management team that writes our checks or the people that give the management team the money to make sure our checks don’t bounce?

This week I have been doing some consulting with an east coast firm trying to help them out of a death spiral brought on by a perfect storm-like set of circumstances.

Reviewing the company data, this company built a high quality sales force that frankly I would love to have working for me. This company has amazing reference stories and some raving fans as customers that are more than happy to share their stories on the company’s behalf. While not a major household brand, this company has been involved in building some major sales initiatives and major technology deployments for some instantly recognizable brands.

So what happened?

This company lost some of its swagger and part of its identity over the past year as the economic downturn forced some key clients to close. Some projects lost funding, some account losses were a surprise, and everything negatively impacted cash flow. Compounding the issues are a handful of slow and no-pay accounts that are eating up cash reserves.

But none of those issues were the big problem, only symptoms leading to the problem they have today.

The real underlying problem is that the events that occurred put management in unfamiliar territory, second guessing every decision to the point of making no definitive decisions, and the lack of decisions degraded the situation into one of chaos.

There is nothing wrong with the fundamentals of the business that their existing sales team and customer base cannot help them work through, but they have to make the decision to move forward.

The company reached a point where it could not get out of its own way.

The more I thought about this company and their problem, the more I thought that there was a message here worth sharing with all of you.

When things go wrong we can get caught up in self-analysis that leads to paralysis, trying to figure out what we did wrong or what went wrong with the business model that shook the very foundations of the company.

Stop looking at the storm surrounding you and start looking at the vehicle that is going to get you out of it.

If you find a hole in your boat, fix the hole, don’t sink while trying to figure out how to build a whole new boat while at sea, in a storm. Have some faith in what you have built, have faith in the preparation you have put in, and in the proven processes that you have in place.

Assess problems for what they are, not the horrors that they might become.

Focus on your training. Focus on your experience. Focus on what’s right about what you are doing. I meet so many amazing people running great little companies that have taken for granted how talented they really are.

Are the times real scary for some? Yes. Are these challenges going to kill you? Only if you let them.

Inspire your team and stay focused. Don’t let a short term crisis force you to take your eye off your objectives. Set the vision. Choose a course of action, then do something really crazy like actually taking that course of action and begin building the momentum you will need to overcome every set of obstacles between you and your objectives.

A related story about Thomas Edison¹

1914 could have been called a difficult year for Thomas Edison.

 With the onset of World War One, Edison found himself in danger of being compelled to close his phonograph record factory.  Edison needed carbolic acid to make the records, and was the largest user of carbolic acid in the United States.  Edison’s primary supply was imported from England and Germany, and both countries had placed an embargo on carbolic acid because it was in great demand for making explosives.

 With no other sufficient supply available, Edison was faced with one of two choices.  Close the factory or invent something that could solve the problem.

 Edison chose the latter and invented an alternative method for making carbolic acid synthetically and put crews to work twenty four hours a day to build a carbolic acid production facility.  By the eighteenth day the factory was producing carbolic acid, within four weeks it was turning out a ton of it per day.

 Crisis averted, but the year was not yet over.

On December 9, 1914, a sixty-seven year old Edison watched as fire fighters fought a blaze that destroyed Edison Industries with a total loss exceeding $2 million and most of Edison’s life’s work.  Edison was only insured for $238 because the buildings were constructed of concrete and at the time were thought fireproof.  

Charles Edison, former Governor of New Jersey, tells of his concern as he looked for his father during the blaze.  “My heart ached for him, no longer a young man, everything being destroyed.”  Then he says, “My father spotted me and he called out, ‘Charles, Charles, run get your mother.  She will never see anything as beautiful as this fire as long as she lives.”

The next morning, Edison surveyed his charred dreams and crushed hopes.  As he stood amid the disaster, Edison was quoted as saying, “There is great value in disaster.  All our mistakes are burned up.  Thank God we can start anew.”

Edison followed up that statement with a decision to move forward, and a vision of what needed to be done.  Three weeks after the fire Edison Industries was manufacturing phonographs.  By December 31st of the following year, 1915, Edison had sold 95,889 phonographs on his way to what would become 845,228 phonographs sold and over 48,000,000 records.²

1.Thomas Edison story from Van Ekeren, Glenn The Speaker’s Sourcebook. New Jersey. Prentice-Hall, Inc. 1988.

2. Edison Industries sales figures from Meadowcroft, W.H. “Quantity of Disc Phonographs and Disc Records Sold.”

Radio-Phonograph Division Accounting Department Report (April 9, 1929) reprinted in The Edison Discography (1926-1929) available from Mainspringpress.com.

—

“The problem is not that there are problems. The problem is expecting otherwise and thinking that having problems is a problem.”

Theodore Rubin

“The man who makes no mistake does not usually make anything.”

Edward Phelps

“Lead, follow, or get out of the way”

Ted Turner

Image courtesy of jonwashburn.com

Who is managing your sales force, your Sales Manager or your compensation plan?

If you said your compensation plan, the good news is you are in the majority. The bad news is your sales could likely improve 15-20% with a solid Sales Manager steering the ship.  Neil Rackham , in his book Rethinking the Sales Force: Redefining Selling to Create and Capture Customer Value, would say 17%.

When I find a Sales Manager that is giving honest effort but is not effective, it is usually because of one of these reasons.

1. The Sales Manager was your best sales professional and is still your best sales professional. Management? What management?
2. Most companies have a training program in place for new sales professionals and executive management, but few utilize any formal training for their Sales Managers. As a result, Sales Managers have no tools to help them manage the revenue production arm of the company, and run solely on gut instinct.
3. Sales Managers have a responsibility to complete a myriad of reports every week, with consequences for not getting them done. There is usually no compelling reason to make time for training or coaching exercises, and as such they don’t get done.
4. The Right Now. Sales performance is often measured on 30 day – 90 day increments on products and services with sales cycles that are much longer. No one dares to take their eye off the sales ball long enough to build in team development time.
5. The Sales Manager compensation model is out of line with company and/or the sales teams defined objectives.

Here are the first five tools I drop in my tool box when I am headed out to fix Sales Management related problems.

1. Put a “sales Manager” instead of a “Sales manager” in charge of your sales organization. Having the wrong person or personality type in the Sales Manager role is more often than not a significant part of the problem.
2. Train your Sales Manager. If you don’t have the budget, think of what an additional 15%+ in sales could do for your business.
3. Build training metrics into your Sales Manager performance measurements and make sure his/her workload will allow time to get the job done.
4. Build a model of continuous improvement into your sales process, making sure you do not shortchange your sales team’s growth and long term revenue potential for short term sales targets.
5. Align the Sales Manager job and compensation model with company goals to make sure a Sales Manager is watching and responding to the objectives and issues that are important to the company. Tie your Sales Managers compensation to the sales team and/or the sales professionals he is responsible for.

I want my Sales Manager to take care of his customers (the sales professionals he is responsible for) and keep the road clear of obstacles that might prevent them from doing their job.

I want my Sales Manager to be my eyes on the front line, making sure we are allocating our sales resources in the most efficient way possible to engage prospects and that he has and will use his authority to make necessary changes on the fly.

I want my Sales Manager continually engaged in enhancing or reinforcing the skill set of the sales team and identifying new ideas and best practices discovered by one sales professional and incorporating them into the entire sales team.

Put your Sales Manager to work growing your business instead of growing the stack of paper in your in-box. There is typically not another person in your organization that can have as much immediate impact for the dollar on your front line sales team as a well trained Sales Manager.

Have any Sales Management best practices or unique signs of spotting trouble?  I would love to hear them.

Image courtesy of  lumaxart

How much time does your sales team spend on revenue producing activities?

 According to CSO Insights in their Optimization:2007 Survey Results and Analysis report the actual amount of time a sales person is actively engaged in selling averaged just under 36%.  My own experience would suggest that sales professionals’ time spent on revenue producing activities is closer to 30%.  The best run sales organizations that I have experience with engage in revenue producing activities, at best, no more than 50% of the time.

 If you don’t know where your sales team stacks up, it is time to measure.  If you find your sales team is engaged in revenue producing activities at or below 25% of the time, then there is a distinct possibility that you could almost double your revenue producing activities and lower your Cost of Sales considerably.

 If you find you have room for improvement, here are some of the most common things that eat a sales professional’s time.

 Building Proposals/Quotes – Look to offload this function to a non-sales role or to a low cost sales role where the proposal building experience could be used as a training tool.  If that does not make sense for your business, build common templates and boilerplate text to simplify the process as much as possible.  Think about your likelihood of winning a project vs. the amount of time you are going to spend on the RFP.

 Lead Generation – The same CSO Insights survey highlighted the fact that 18% of a sales professional’s time is spent generating leads.  This subtopic is worthy of several posts in and of itself.  If leads are being generated for sales within your organization, look at the quality and quantity of those leads.  A large quantity of poor leads is almost worse than no leads at all.

 Sales Meetings – Many sales meetings continue well beyond their expiration date. Is there a defined agenda for each meeting?  What items could be better communicated in a less time consuming way?  What items could be eliminated completely?  Eliminating four hours of meetings could give you 10% of your week back.

 Managing the Internal Sales Process – In the early days of my B2B sales career I spent as much as five hours a week walking a signed proposal through our internal processes, getting items ordered, following up on backordered items the order desk failed to tell me about, making sure all of the items arrived, setting up delivery, coordinating installation, making sure we invoiced for the correct items/amounts, making sure we had applied payments correctly to make sure my commission check would be correct and assisting with collections when it became necessary.

 Map your own internal processes and look for ways to streamline your workflow and get sales disengaged as much as possible from this process.

 CRM Software Data Entry/Retrieval – CRM software, when designed well CRM can be a fantastic tool.  Designed poorly, it can be an agony inducing, time sucking vortex that is worn like a boat anchor around the entire sales teams neck.  

 Work with your sales professionals and watch how valuable data is recorded and retrieved.  Look at the areas they use most frequently and the specific steps they go through to get to that data.  Does that process make sense?  If not, do your own ROI calculation on getting customizations done vs. the sales time lost.

 One Software-as-a-Service CRM package I have personal experience with could waste as much as five or ten seconds on every click as data moved back and forth across the web.  In my own pursuit of efficiency, I found that I was losing up to half an hour a day to those delays.

 Expense reports and other administrative paperwork – Look at all of the reports and paperwork you ask your sales professionals to create and ask yourself two questions.  Do we really need this report?  Does it make sense that our revenue producers are spending time on this as opposed to selling?  If it makes sense, great!  Carry on.  If not, look for ways to improve or eliminate the process.

 One more point before we wrap it up.  Finding, offloading or eliminating these non-revenue producing tasks is only half the battle.  Before you begin, establish a baseline of calls/meetings and other revenue producing events so you have a gauge on which to measure your progress. 

 Recovering five to ten hours a week for each sales professional to spend on revenue producing activities is only beneficial if they actually spend that time on revenue producing activities.  From my experience, you will need to break out your training hat and work with what could be up to 40% of your sales staff on the best ways to use the “extra” time.

 Every time I have done this exercise I have been amazed by some of the low value tasks that eat up enormous amounts of time and unnecessarily increasing my Cost of Sales.

 One more last, last point.  To maximize the benefits of this process, do not let this exercise turn into a micro management tool.  Remember your end objective is to increase “customer-facing revenue producing time” not “looking over my shoulder, wondering who is watching me time.”

 We have barely scratched the surface here but I hope this gets you thinking, measuring and doing.  If you have a “best practice” that helps you measure your revenue producing activity percentage or keeps you or your sales team engaged in revenue producing activities, I would love to hear about it.  As always, give me your thoughts and let’s get smarter together.

 Click here to learn more about CSOInsights and their annual studies.

Photo courtesy of http://fasteddie.wordpress.com

Before a decision to purchase is made, be it a newspaper or multi-million dollar project, a buyer has to evaluate the risks of making that purchase.

The basic types of risk are:

1. Physical Risk – The risk of injury by using the product or making the purchase.

2.Financial Risk – The chance you could lose money, or have to repair or replace an item.
3. Functional/Time Risk – The risk the item will not perform as expected or deliver the benefits promised or risk related to the passage of time and the possibility of rapid obsolescence.
4. Social Risk – The risk associated with what friends, co-workers, the boss, a spouse will think and do if a purchasing decision is made, including the risk of being fired from a job based on a purchasing decision. Hence the old tagline “Nobody ever got fired for buying IBM.”
5. Psychological Risk –The risk of experiencing “buyer’s remorse,” feeling bad, feeling guilty or other negative emotions for making a purchase decision.

All five of these risks are part of every purchasing decision. How you build your case to offset these risks for your buyer will determine how likely and how successful you are at closing the sale.

Bob Taska, a world class customer service driven car dealer, in his book “You Will Be Satisfied” took an interesting approach to eliminate some or all of all five risks when the quality of cars coming from Lincoln-Mercury were showing up on his lot with more than a few defects attributed to poor assembly from 1967 through the early 1980′s. He began a practice of what he called “blueprinting” the new cars, or rebuilding each car to the manufacturers design specifications. He advertised and sold his “blueprinted” cars at a 5% premium to cover his costs, developed a unique product, eliminated the risks associated with buying a Lincoln-Mercury at the time, developed a loyal following, and earned enough credibility to sell his cars from that point forward without the typical haggling associated with a car purchase.

Assess the Risks of Doing Business with You

Take a step back and look at your company, your brand, your products, your service, sales team, your overall reputation and what your customers are saying, accurate or not, identifying your strengths and weaknesses in each risk category from your perspective. Then repeat the exercise from a customer or likely prospects perspective.

Depending upon your sales cycle, you may want to look deeper than just the prospect you are meeting with. Will your prospect need additional risk mitigating information to defend his or her purchasing decision or materials they can use to help sell your solutions internally to people you may or may not have access to?

It would be a mistake to lump your company, your staff and your products together as you make your assessment. Weigh each one (Company, Product Category, Team, Product) separately to get a more honest assessment as strengths in one area may offset weaknesses in other areas.

Example 1: The strength of the IBM brand could offset some of the risk associated with a new, never heard of computer product. On the other hand, the IBM name would not carry much weight if that new product was a loaf of bread.

Example 2: A trusted sales professional could add credibility to a product with his long term clients by putting his/her stamp of approval on the product just as a less-than-reputable sales professional could add so much risk for a potential prospect that they would not even want to hear about the product.

Example 3: Toyota’s strength in building quality cars and being dominate in the electric/hybrid car category, thanks to the Prius, would most likely offset some risk associated with a brand new electric/hybrid car.

Example 4: The (social) risk I place on buying a $10 toy for my daughter is medium because I am concerned about buying something she will like, that will not be a waste of money (financial risk – medium.) The risk my 8 year old daughter places on buying a $10 toy is high, because it takes her a while to earn $10 (financial risk – high) and she has few opportunities to go to the store and shop (psychological risk – medium to high, functional/time risk – high,) and her friends might make fun of her when they hear about it (social risk – high) so it takes her a long time to make a buying decision. If there is a Pogo stick or Rollerblades involved, now there is physical risk to contend with as well.

How Risky is it to do Business with You?

Risk is part of life and certainly part of the purchasing decision. Take the time to make an honest assessment of the risks of doing business with your company from the prospects perspective and uncover the areas where you might be vulnerable.

What can you do to eliminate the risks associated with your products or services? How can you add enough “credibility” to your new company to outweigh the risks of doing business with you vs. a name brand leader in your field?

I would really like to hear what you come up with. Need some ideas? I am just a quick email away val {at} saleslaundry.com.

Image courtesy of thesituationalist.wordpress.com

For your 3 minutes today I will show you one consistent way to come across a little smarter to your prospect in a meeting and how to put them a little more at ease.  Planning is part of the conversation, so with that I am kicking us off with one of my favorite quotes on the subject of planning.   

 “You know what I noticed? Nobody panics when things go according to plan–even if the plan is horrifying. If tomorrow I tell the press that a gang banger will get shot, or a truckload of soldiers will be blown up, nobody panics, because it’s all part of the plan.”

-          The Joker (Heath Ledger) “The Dark Knight” 2008

Everyone, prospects included, likes to know there is a plan.  Everyone is happier, still, when they know what the plan is.  It must be hard wired in our DNA somewhere.

 Plans are everywhere.  Go to church?  They give you a church bulletin that lists everything that is going to happen, and we feel better knowing.

 Getting the car repaired?  As soon as we give them the keys we want a plan.  We want to know what they are going to do to it and when it will be ready.

 Going in for Surgery?  It is not quite as frightening when the doctor tells us his plan.  The same is true for every aspect of life, right down to our economy.  When everything falls to pieces and chaos ensues we move to the brink of panic until there is a plan to rally around, no matter how miserable the plan is.

 Want to seem a little bit smarter on your next account call?  Pre-plan the sales call.

Want to look like an expert and put your prospect a little more at ease?  Pre-plan your sales call and explain the details of the plan to your prospect up front and get natural human nature working in your favor.

Example: 

“Hello, Mr. Jones.  It is great getting a chance to meet with you today.  I have done some research, but if you don’t mind, I would like to ask you a few questions to get a better understanding.  Is that alright?”

 “Sure.”

 “Great.  I’ve got five or six basic questions that will fill in some gaps for me and give me a better understanding of your company.  That should take us about 15 minutes, depending upon your answers.  After that we should spend about 20 minutes drilling down into some specifics and identify a few areas where we might be able to help one another, leaving the balance of our time to wrap up any loose ends.  Do you have any questions before we get started?”

 When I was taught this it was called the Predict and Prove Method or the Sandwich Technique.  The objective is to predict the basics of what will occur in the meeting, prove your prediction by executing the meeting properly, and then following up at the end to confirm the fulfilled prediction with your prospect.  End result?  You look smarter and your client is not wondering where or when your sales odyssey will end.

 Got it?

 Good.  See you Monday.

 “I love it when a plan comes together!”

– Col. John “Hannibal” Smith (George Peppard) “The A-Team” 1983