Category Archives: Revenue Risk Management

Good Tweet / Bad Tweet. Is Twitter Worth the Risks?

According to a recent SEC ruling, telling the truth is no longer illegal.

Yes, you read that correctly. After Reed Hastings, CEO of Netflix, posted a factual 43-word message on Facebook, the SEC wanted to prosecute him. Then, they decided not to. “The risk of going to jail for disclosing accurate information is a relic of a regulatory approach that makes no sense now that digitally distributed information is easily accessible by all,” L. Gordon Crovitz wrote in The Wall Street Journal (The SEC Decriminalizes Facebook Postings, April 9, 2013).

The SEC’s Regulation FD mandates that material facts cannot be selectively disclosed, selectively being the operative word. By the end of this year, about one billion people will have a Facebook account—not your average group of clandestine inside traders. According to Crovitz, “the playing field for information is flatter than ever. The Netflix case raises the broader question of why regulators still claim any power to limit truthful speech.”

Threat of SEC sanctions has made many risk managers and executives skittish about social media. Last year, one company fired its CFO for posting “Board meeting. Good numbers = Happy Board” on Facebook. At least with the Netflix ruling, it’s now OK for executives to log on to their favorite social media platforms without using an alias.

The worry is far from over, however. With social media, we’re unprotected from the greatest risk of all—ourselves. There are many personal foibles that enter the picture, but it’s quicker to just blame naiveté.

Our still-primitive social skills haven’t adjusted to modern technology. Information ubiquity, amplification and data storage have cursed our social interactions. Propelled into cyberspace in real-time, our conversational indiscretions can’t be hidden. Instead, our mistakes are indelibly etched in digital granite. And no platform presents greater problems than Twitter. In fact, of’s eleven greatest social media disasters of 2012, nine involved wayward Tweeting, each of which I’ve summarized in less than 140 characters:

1. With McdStories, “McDonald’s paid to promote a trend that showered the company in bad publicity.” #oops

2. Snickers paid celebrities in the UK to tweet pictures of themselves eating Snickers bars. Not allowed. #illegal.

3. American Rifleman posted a pro-gun tweet as the mass shooting in Aurora CO was unfolding. #dumb #whatweretheythinking

4. CelebBoutique posted a promotional Tweet using #Aurora to exploit a trending topic, without knowing why it was trending. #insensitive #stupid

5. A Microsoft employee criticized conservative pundit Ann Coulter from Microsoft’s Twitter account, not from his own. #oops

6. A KitchenAid employee made a disparaging Tweet about Obama’s grandmother. #firethisidiot

7. A Stubhub employee used the f-word in a company Tweet. #firethisidiot

8. American Apparel offered discounts to ‘bored customers’ during Hurricane Sandy. #insensitive #stupid

9. At the height of Hurricane Sandy, the Gap encouraged people to do online shopping. #idiotic

Somewhere, somehow, somebody will Tweet something stupid.—a corollary to Murphy’s Law for the digerati. The ol’ slip of the tongue, seen by 13,797 followers, and archived into perpetuity for anyone to search for and share.

Are Twitter faux pas worth the risk? After all, one good online statement probably won’t increase revenue, but one bad statement can tank a campaign, or more. Break out the Maalox! But before you drink the whole bottle, read up on some ways to manage the risks:

1. Don’t Tweet. Ask whether you’re getting value from Twitter. If there isn’t much, pull the plug.

2. Limit Tweeting to a select few employees. More is not always merrier. Sure, you want your employees engaged in conversations about your company. Just be careful what you wish for, because conversations can be hard to control.

3. Think twice, Tweet once. Unless you want your follow-on tweet to be an apology for the first.

4. Don’t drink and Tweet. In Vino, Veritas. In wine, the truth. Next time you’re sidled up to the bar, remind your staff. Then re-read #3.

5. Audit the social media posts for your employees and prospective employees, and call out issues right away. If something seems wrong, it probably is wrong.

6. Specify clear boundaries for Twitter posts, and put your policies in writing. Hint: community interests can change quickly, so it’s easier to specify what’s not acceptable than to list what is.

7. Keep corporate Twitter accounts and personal Twitter accounts separate. You’ll have a much easier time enforcing your policies. If your employees do mingle personal and corporate conversations, ask them to include the disclaimer, “opinions are my own, and not my company’s,” in their Twitter profile.

8. Be aware—be very aware—of your corporate legal liabilities. An earlier blog, Human Talent or Party Animal? When an Employee’s Social Media Content Becomes a Legal Liability, offers more information.

There’s a high likelihood that you, or someone in your organization, will make a Twitter gaffe this year. After all, we’re only human. But technology is cold and uncaring, and the impact can be high, to say the least. Twitter could use a feature that can filter transmissions. “This comment is inane. Are you still sure you want to send it?” For now, we take our chances, hoping we don’t have to pick up after any errant missives by explaining what we meant to say, or should have said.

High likelihood, high impact—what keeps risk managers up at night. With that in mind, an ounce of prevention—or with Twitter, an ounce of discretion—is worth a pound of cure.

Failure – Breakfast of Sales Champions?

“Disney is working on an RFID wristband system it plans to launch this year at its theme parks. Called MagicBands, it will let guests pay for goods, check in at rides to map their day’s activity and even send data to characters in the park—so that Snow White or Mickey Mouse can address a child personally.”

By a show of hands, how many think Disney’s innovation will move beyond pilot, and provide positive financial returns?

Some of you say yes, but I have doubts. The programming task alone seems so daunting. I see a global team of software engineers trying to make Mickey’s elocution flawless, so he can pronounce names like Aaradh and Emilija without mangling the sounds. Someone has to sweat the details. Imagine hundreds of toddlers just inside Disney’s welcoming gates, inconsolable because Mickey or Snow White got digitally tongue-tied. “It’s OK, Sweetie. They’re just using buggy software.” Oh, the humanity!

Hitting revenue targets depends on the success of some pretty risky endeavors. I can hear the RFID salesperson right now. “An IT-enabled Mickey who never forgets a name? Sure, we can do that. How many wristbands do you expect to use in the first year?” Best not to put this one in the win column, at least not just yet. Eighty percent of new innovation projects fail. Sixty-eight percent of IT projects fail. Seventy-five percent of consumer packaged goods and retail products fail to earn even $7.5 million during their first year. Let’s face it: every day, sales professionals sell into an abyss that’s wide and deep.

And likely to become deeper. According to a recent article in The Wall Street Journal, “Companies large and small are trying to coax staff into taking more chances in hopes that they’ll generate ideas and breakthroughs that lead to new business. Some, like Extended Stay America, are giving workers permission to make mistakes while others are playing down talk of profits or proclaiming the virtues of failure” (Memo to Staff: Take More Risks, March 13, 2013).

Employees have become loathe to accept the risk of failure—a byproduct of a difficult economy. Their employers recognize this, but they also know that without innovation and change business strategies cannot succeed. Change of any type brings new possibilities for failure. To ensure that when employees are faced with the choice “innovate or die” they don’t select the latter, companies are prodding staff to take more risks by not penalizing them for failing.

Makes sense. But, hang in there with me, because here’s where things become weird. The very part of a company tasked with facilitating change—the sales organization—whose “change agents” face great risk and uncertainty every day, can’t tolerate failure. “If a rep doesn’t make quota, we don’t keep him around,” one District Sales Manager recently told me. “One would ideally see the median quota attainment at or slightly above 100 percent,” J. Mark Davis wrote in an article, Managing Sales Compensation in an Uncertain Economy.

The incongruities portend even more rancor between customers and salespeople. Customers are adopting a more nuanced and accepting view of failure, while sales executives are steadfast in remaining largely, if not completely, failure-intolerant. Salespeople will go nuts when projects don’t go into full production, or when they fall into the stasis of no decision. Who can blame them? Their very jobs could hinge on an opportunity coming to fruition, which means not only closing, but delivering fully on the anticipated revenue. That gravity extends to their district and regional quotas, and beyond. When a key opportunity or two tanks, the ripples are felt all the way to the CFO’s office. Meanwhile, customers will become ever more blasé. “Sorry about your quota, but, well, this is the reason we maintain a portfolio of projects.”

Increased buyer acceptance of project failure will have an inevitable impact on sales results, and revenue will become more inconsistent. Companies can manage that risk in other ways, for example, by building larger opportunity pipelines. But simply pummeling the sales force won’t create immunity to anything, except happiness. The job of selling includes failing—much as we might want to prevent its occurrence. That alone will bring buyers and sellers into closer alignment.

You Want Revenue Results? Be Careful What You Wish For!

“Create social media campaigns that get results.” Which kind of results, I wonder—good results, or bad?

Semantic fuzziness—the literary equivalent of white noise. There’s too much of it in marketing hype. Results are not always ones people want. Still, many companies pedal their wares using these sweeping, but utterly hollow proclamations.

“We wasted our money!” That’s a result. Not a good one, obviously, but a result. So are backfires–results that are both unintended, and highly negative. Singer Mary J. Blige promoting Burger King’s chicken strips. #McDStories. Lance Armstrong, celebrity spokesperson. Oops. Results!—be careful what you wish for.

Best to always ask your vendors and your project team, “exactly which results should we expect?” Assuming they’re ones you want, follow with “how will we ensure those results are achieved?”

The answer should include:

Problem definition. As inventor Charles Kettering said, “a problem well stated is a problem half solved.” Many campaign failures result from a poor definition of the problem to be solved—or no definition at all.

Planning. Include realistic expectations, thorough risk analysis, and scenario building for what to do if the project results veer into the negative. And as Burger King’s CMO will now tell you, bring plenty of empathy for your prospects and customers to your planning meetings.

Testing. Before a campaign goes live, soliciting customer and employee input reduces risk.

Proper execution. Guard against scope creep, and gold plating–adding capabilities “because we can.”

Using the right metrics. Too many controls can be just as stifling as insufficient controls.

Governance. Every business development project must align with corporate strategy and comply with high ethical standards throughout the life of the project.

Learning. As Ogden Nash said, “At last I’ve found the secret that guarantees success. To err, and err, and err again, but less, and less, and less.”

We’re surrounded by unintended project consequences—some bad, some good. Bluetooth technology and Viagra,* respectively, come to mind. The first key: don’t just ask for results. Know the results you want, and how to get them. Then, know what to do if something else happens.

* Note: Through bluetooth, identity thieves (and governments) can eavesdrop on voice and data traffic to and from mobile devices; Viagra was originally developed to treat heart ailments and high blood pressure.

The Right Sales Questions Will Get the Right Answers

The movie, The Return of the Pink Panther, provides a great lesson about making assumptions. Peter Sellers, playing the immortal Inspector Clouseau, sees a small dog in a hotel lobby, and asks the clerk, “Does your dog bite?”

The clerk responds “no,” and Clouseau reaches to pet the dog, which immediately bites his hand.

“I thought you said your dog did not bite!” he exclaims. To which, the clerk replies, “That is not my dog.”

In sales, how do we know if our prospective customers are answering the questions we think we’re asking? How do we know if we’re asking the best questions—or even the right questions? The Pink Panther vignette illustrates both humorously and poignantly what can happen if we take actions when there are incongruities between questions and perceived answers.

I can relate to Clouseau’s not-entirely-self-induced folly, and I wondered whether sales questions I’ve used could be similarly entertaining fodder—or, at the very least, instructive. So I reflected on my inventory of sales calls over 20 years and came up with two examples—one failure and one success—that illustrate what can happen when you’re asking questions in selling. If you don’t have time to read to the end, here are my conclusions: getting to the right answers requires careful thought and constant practice. There are no shortcuts, but there are some best practices.

A failure

I worked for several weeks to secure an appointment with the vice president of operations for a large national chain of dollar retail stores, which I’ll call Stuff for a Buck. My company’s product was a suite of bar code scanning hardware, software, label printers and services. To prepare, I studied the dollar chain’s distribution, logistics and competitive challenges. I was ready for The Meeting at Stuff for a Buck.

After asking mostly ordinary empirical questions such as: “How many trucks? How many warehouses? How many shipments per day? And how many stores by region?” I moved to the pain part. (I was told early in my career that a big part of selling is to “find out what keeps the customer up at night.”)

“What goes wrong in your daily operations?” I asked. The VP responded, “It’s quite common to put the wrong load on the trailer. For example, the truck going to Charlotte might actually be carrying the inventory that’s supposed to go to Wilmington. It happens quite often throughout our distribution network. We haven’t found a way to prevent it.”

Ka-ching! I hit what-keeps-me-up-at-night pay dirt! My supposedly keen industry insight caused me to extend his answer into the downstream logistics migraines that Stuff for a Buck must experience: heavy trailer loads of goods shipped in error all over the country. Goods in transit out of control and arriving in unintended locations. Stock outages. Customer service issues. After collecting some more data from the VP and offering him the hope that my proposal would eliminate his problems, we exchanged pleasantries about kids and golf, and I departed his office.

Using what he’d told me, I developed a proposal for a real-time, multi-warehouse inventory control system, including 200 handheld and mobile terminals and dozens of radio frequency access points. Inventory movement would be efficiently and accurately recorded with the simple pull of a scanner trigger. No more mistakes. No more manual data entry. No more paper. All this for $300,000—an excellent value considering the multimillion-dollar scale of the company’s inventory and transportation costs. Of course, I forecast my sales opportunity to close in the current fiscal year and received kudos from my district and region managers for having uncovered such a valuable lead. High fives were given all around, and we believed we couldn’t lose. I sent the sales proposal to my prospect and awaited the affirmative response, which never arrived.

Why? The major reason was because I hadn’t explored or understood the problem’s impact on the enterprise. As the VP later explained, “We sell everything for a dollar. Our customers don’t expect to see specific items in stock, so it’s not a headache if the wrong truckload backs up to the store’s receiving dock. They’ll unload it and put it out for sale. We don’t like it, but it doesn’t really matter to us in terms of our financial performance.” End of story. My opportunity was lost. My prospect eventually became someone’s customer. But not mine.

What did I learn? First, that the VP had answered my question as he heard it. I had asked, “What goes wrong?” when I thought I was asking, “What goes wrong that matters to you?” I misconstrued the gravity of the problem because it was the first one the VP mentioned.

Second, my industry knowledge had mutated into myopia, which prevented me from asking the right follow-on questions. Had I been a little more curious, I would have asked questions that would have helped me gain more insight, such as: “What is the consequence when the wrong goods show up in Charlotte? What does this problem cost per occurrence and annually? What impact do those costs have on overall financial objectives? How will this problem affect strategic goals if unabated?

Third, by tackling the first problem the VP described, I failed to complete the picture. I didn’t ask, “What else?” followed by questions that would have not only exposed problems far more consequential to the organization but also provided me with a broader perspective on its operational issues.

Finally, my discovery process should not have been limited to talking with just one individual. I should have taken the time to ask networking questions, by which I could expand my contacts and gain a breadth of opinions and information—like a wiki model in which the value of the answer increases with multiple viewpoints.

A success!

At a different company, I sold Oracle integration services to firms in the mid-Atlantic area. Our short-term objective was to sell services for installing the next version of Oracle’s operating system, but my company’s California-based staff and lack of local references made that challenging. Yet our consulting practice leaders were resolute on promoting such high-dollar, long-term projects. Consequently, my initial prospect-qualification questions centered on whether the prospect planned to upgrade to Oracle 11i in the next 12 months. Most didn’t. After a few weeks of cold calling, I finally obtained an appointment with the IT manager of a distributor I’ll call XYZ Healthcare Products, though he was reluctant to talk about upgrading.

When I arrived at XYZ, I learned that the IT manager had invited eight colleagues from other departments to join our meeting. We began our discussion about whether there was a business case to upgrade to 11i. The more questions I asked about upgrading, the clearer it became that it wasn’t necessary. The conversation began to trail off as people looked at their cell phones and watches. Was it time to end the meeting and check my email on my way to my car to learn about a hot new lead?

I didn’t, because something nagged my curiosity: Why were there were eight people assembled to discuss an issue that appeared all but decided? Although I didn’t ask that question, I decided to ask a different one: “Assuming that technology and finances posed no constraints, what would you change right now about your business processes and operations?” The IT manager shared that a significant unsolved problem was that the company needed to produce a customer-ready invoice that could be placed in the shipment box during final packing, and Oracle’s “vanilla” software couldn’t provide that capability, causing XYZ to delay invoicing. His response surprised me because superficially the problem seemed minor, but his comment elicited nods from his colleagues.

That answer meant that the massive consulting project I needed to close had just devolved into a few billable hours to provide this seemingly-prosaic modification. Considering how insistent my practice managers were about selling upgrade work, I could have lost my sales resolve. Instead, I wanted to know more. What was it about this issue that created such visceral pain among these managers? As my mind filled with questions, I asked, “What does this limitation mean for your operations?” Their answers exposed issues ranging from customer service to logistics to receivables administration.

Probing the receivables challenges yielded insight into perhaps the greatest strategic challenge XYZ faced. The invoicing delay caused significant cash-flow problems. “Why haven’t you fixed this already?” I asked. “We thought it couldn’t be done, and, up to now, no one has taken the time to come here to meet with us.” I explained that providing the change they requested was not complicated. XYZ’s president was then called to join the meeting, and he excitedly corroborated what his managers had told me. The company signed a contract for the modification and became a client.

What did I learn? First, my central qualification question, “Do you plan to upgrade to 11i in the next 12 months?” was based only on what I wanted to sell; it risked missing opportunities because it ignored uncovering the outcomes my prospects required. By asking the right questions, I was able to learn that the immediate burning issue could be located in an unexpected place, and by providing a solution to address that issue, I could create a new sales path toward my higher-dollar work: the 11i upgrade service package.

Second, by removing constraints from the possible answers, I was able to eliminate boundaries that prospective customers often impose on themselves. Similar to vendors, prospective clients develop myopia based on perceived technical, financial or resource limits. Gathering requirements information that is unbound by those limits is important early in the sales process because discovering what the prospective customer wants is more valuable than discovering what he thinks he can get. Both questions must be asked, however, because the answers matter—and are often different.

How can salespeople improve discovery skills? Here are the key habits for success:

  • Bring an insatiable curiosity to your appointments.
  • Don’t assume you know the answers to your most important questions.
  • Endeavor to see the world through your client’s eyes. This empathetic view requires one to ask questions.
  • Listen for unexpected answers, probe further and have the agility to capitalize on the resulting opportunities.

The president of a large local real estate company once told me that he views asking questions as the single most important selling skill—and that few agents do it. Extrapolate that problem to other industries, and it’s no wonder that many companies suffer from low sales productivity.

A few years ago, I performed a nationwide survey of sales professionals about how they use questions to discover customer needs. The answers revealed a wide range of patterns, techniques and favorite questions, suggesting that there are many pathways to successful discovery. The best idea I received was this one: “If I’m unclear about who, what, when, where and why, I keep asking questions.”

ROI Calculus: More SWAG than Swagger

Is your product’s ROI a bit low? Does it need a little . . . encouragement? All it takes is a healthy imagination, and a spreadsheet.

Start by changing an assumption or two, and adjusting some numbers. Add inventory cost reductions your client will receive from the new predictive analytics algorithms available in your upcoming software release – the one that Development has promised next quarter. Factor in the added revenue your client will achieve.  It’s right there in your marketing collateral! Now, reduce their operating costs by another 3% from increased software reliability.  Voila!  Your business case appears stronger than ever!

And not a moment too soon, because by making some different accounting tweaks, your competitor just pumped new sunshine into her ROI estimate. As did the Lead Project Engineer at your prospect’s company, who needs management’s approval, or he’s out of a job. For now, your thoughtful ROI result patiently waits in a tiny spreadsheet cell alongside theirs, wildly different and barely credible. In sales, patience is never virtuous. But that doesn’t matter. Here’s why:

1. Technology ROI numbers are SWAG’s, at best. “The most complex variable in the return-on-investment equation—one that’s usually ignored—is the cost of the business re-architecture required to consume a proposed technology. . . Know that technology demands business transformation, and that’s usually the largest hidden cost,” Coverlet Meshing wrote in InformationWeek. (Why Tech Projects Fail: 5 Unspoken Reasons, April 22, 2013)

2. ROI rarely drives investment decisions anyway—business developers and their managers assume that it does. “In most companies, determining the potential costs and benefits of a tech investment is neither art nor science,” Meshing wrote. “Rather, it’s an elaborate and often dishonest marketing exercise (upward and outward-facing) aimed at persuading senior stakeholders that one [project] should win out . . . The unintended consequence in IT is that project funding more often goes to mildly technical marketers and shameless salespeople, not to hard-core engineers and scientists who let the data drive.”

3. Projects are usually long-term, but accountability is short-term.  Within companies, “there’s a structural incentive for career mobility. Long-term projects are consequently damned if you move and damned if you don’t. The usual response to this short-term culture, a three-to five-year vesting period for bonuses, doesn’t actually encourage long-term thinking,” Meshing says.

4. ROI estimates have a shelf life that compares more to fresh fish than to Hostess Twinkies. “. . . your business conditions, the most important context for your IT projects, change faster than the project. It’s why users often reject technology that gives them what they asked for: by the time the technology is delivered, it’s no longer what they need,” according to Meshing. Prospects would be better off speaking the truth: “Sure—give us your best ROI estimate. Just remember, it’s borderline meaningless.”

“My ROI’s bigger than your ROI!” Salespeople proclaim it loudly, but the joy rarely lasts very long. ROI calculations are easy for others to eclipse. Even a summer intern with no finance background can create amazing ROI improvements through perfunctory adjustments to the numerator and denominator. All it takes is a little advice from a commission-driven salesperson. “That server upgrade would be required no matter what they decide. We can exclude it from the capital investment . . . Should we expense 100% of the data migration costs up front, or amortize them over the 7-year life of the project? . . . Do we embed application training into the project costs, or expense it separately, as Ongoing Staff Development?”

Ka-ching! Isn’t math great?

Nobody should assume ROI calculus is precise, consistent, or fair. Call ROI anything you want, just not objective, and never an endpoint of financial analysis.

In my next blog, I’ll share three elements technology marketers can use to support a strategic and financial case for their product or service.

* ROI = Average annual operating cash flow divided by net investment. The equation does include variables for risk, time, or cost of capital.

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