Sales Laundry

Posts Tagged ‘product offerings’

When sales are difficult to come by, there is, I believe, a natural gut instinct to nudge a company toward broadening its services in hopes of reaching a wider swath of potential customers.  You typically have to look no further than the existing Sales Managers and Account Executives to find the source of this internal “Scope Creep.”

 While this idea may sound good bouncing around your head, in practical application this seemingly small leap in logic can very well destroy a company.

In electing to follow this strategy you are in essence trading some of your market depth for market breadth, and your competitors will love you for it. 

 Lose some focus on what you are best at and you run the risk of alienating some of your current customer base.  Experience any reduction in quality or service while your eye is off the ball and you just make it that much more difficult for a prospective customer to differentiate between you and a close competitor.

 Lacking depth and experience in you new expanded area of focus, you risk never establishing a customer base.

Lacking a specialization or something to hang your hat on, it is very easy for a company to succumb to “death by being average.”  Look no further than the recent death of Circuit City.

This is not to say a company cannot expand successfully.  They can and do every day with planning and new infrastructure to support the growth.

 In most instances, the better answer is to narrow your focus to what you are absolutely best at and where you hold the maximum competitive advantage.  Mine existing sales, established relationships and references to build sales leverage, making each new sale easier than the last.

If you are not known for something you will be known for nothing.

Over the years I’ve been through several reshufflings of product, service or target market.  Some of these changes have been revolutionary following industry changes, some evolutionary, and some have been flat out ground up rebuilds when management transitions or other fundamental changes to the business were at hand.

 I have watched these changes occur from the perspective of an Account Manager, Sales Manager, Director and finally, VP.  One thing that seems to get missed in the discussions of deepening the offerings, broadening the offerings, positive average margin impact, vendor training, leads, and promised revenues is the grey matter between the account managers ears.

 There is only so much space in anyone’s head.  You can only keep so much information at the forefront of your peanut head at anyone time.  If you thought about it like an old school newspaper or your favorite new site, there is only so much premium space above the fold (or before you start scrolling down.)

If you have anything north of 10 offerings for your rep to drive out in the field, you really only have 1-5 that he is going to be actively working and watching for and maybe 10 offerings in total that he has sufficient depth to discuss in some detail. 

 The “Closet Offerings” as I call them, or everything beyond 10, do not get mentioned unless prospect comments or questions happen to push the conversation in that general direction.

 When you get a call to broaden your offerings or to go after an increasingly wide and diverse market (typically when sales are slumping and revenues tighten up,) resist the urge to simply pile on more products and new markets to your existing team.

If it is not on the billboard in your reps head, it is not going to get said.

 You would be better served reevaluating and reshuffling the offerings occupying the prime space, page 1 above the fold, in your Account Managers head.  From my experience a better quality and quantity of sale will result.

 As an added bonus, develop clear concise messages for you defined offerings to keep the sales team “on message” and ad libs to a minimum.  Develop policies and procedures on the backend to clarify how your operations and services units will execute and deliver on the products and promises your Account Managers are pushing out the door.

 Final thought.  The next time a vendor talks to you about adding product remember to consider your sales teams mental product line up.  To give mindshare to a new product you have to be comfortable with the fact that an existing offering will lose some traction or be eliminated.

Fill those minds wisely.

A man trying to go more than two directions at once is not moving at all.

image courtesy of http://www.worth1000.com

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.