Category Archives: Revenue Risk Management

Announcing the Winners of the 2013 Sales Ethics Hall of Shame!

Monday, 25 November 2013 17:05
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“Do the right thing. It will gratify some people and astonish the rest.” – Mark Twain

Passion, focus, and relentless tenacity—table stakes for achieving any revenue goal. “Team! Let’s take that mountain!” At this point, things get complicated. For some organizations, doing the right thing doesn’t have a fitful place in the tactical mix. “Ethics? What’s that?” A few enterprises, like these award winners, lose their way. Others discover that the scramble toward the revenue summit traverses a slippery ethical slope.

Candidate companies for my 2013 Sales Ethics Hall of Shame had to clear three exacting hurdles. First, the primary purpose of the enterprise couldn’t be illegal, like human trafficking or selling crystal meth. Second, more than one employee had to be involved in unethical activity. And third, any chicanery had to be repeatable and scalable—in other words, embedded in the company’s business process.

The 2013 winners passed another demanding threshold, one that no formulaic analysis can expose. The company’s practices had to bury the ethics needle all the way into Eeeeeeewwwwwwwwwwww!, and keep it there. Not easy to do, but as you’ll read in these vignettes, these four inductees have what it takes—and more.

Dun & Bradstreet Credibility Corporation. First, needlessly frighten prospects. Then, close! Close! Close! Imagine you’re sitting at your desk and the phone rings. You answer, and the caller from Dun & Bradstreet Credibility tells you that your company’s credit status has changed to “high risk,” and that your poor credit score could deter lenders, suppliers, and clients. The salesperson pitches you to buy a credit-management service, CreditBuilder, from his company to rectify the problem. What do you do? Until the call, you had no idea.

According to a June, 2013 Wall Street Journal article, Krista Bradford, owner of a small company, The Good Search LLC, spent almost $1,000 on the service, but now believes she was misled. Her “excellent and extensive” credit was always paid on time, and once she signed up for CreditBuilder, her credit rating changed, “as if someone had simply flipped a switch,” she said in an interview.

She’s not alone. More than a dozen other business owners revealed to The Wall Street Journal that they had been misled by the same pitch. “These business owners raised questions about whether Dun & Bradstreet Credibility, a three-year-old company . . . is unfairly preying on their anxieties, in order to sell its credit-management program. Credibility’s sales pitch is particularly worrisome, some say, because of its close relationship with its former parent, Dun & Bradstreet Corp.” A former company employee shared that the telesales script provided to staff prompted them to say that based on a lack of credit information for the prospect, “it looks like you may be a failing business,” and then to recommend CreditBuilder as a solution.

Pilot Flying J. When customer rebates are withheld, profits and sales commissions grow. After the FBI raided Pilot Flying J’s Knoxville, Tennessee corporate headquarters in April, 2013, their investigation produced an affidavit that asserted Pilot employees discussed “a new internal Pilot two-tiered pricing structure that would impose higher prices on less sophisticated customers.” The FBI’s 120-page affidavit was “filled with detailed allegations of how Pilot’s sales team deliberately withheld rebates to boost profits and sales commissions,” according to a Wall Street Journal article, Pilot Truck-Stop Chief Pleads: Don’t Sue Us.

Pilot CEO Jimmy Haslam III, who also owns the Cleveland Browns football team, pleaded ignorance, saying he didn’t know about the internal practices that led to the FBI’s fraud investigation. “I was absolutely not aware of any of this,” he said. The FBI alleges that 250 of Pilot’s 5,000 customers were not reimbursed for earned rebates. Now Mr. Haslam acknowledges that his biggest job is rebuilding customer trust. “We hope you’ll continue to do business with us,” he told an audience of mainly trucker customers. “I hope you’ll give us a second chance.”

US Coachways – If your customers consistently berate your service, you can always get a good online review from your employees, friends, and probably your mom—if you ask nicely. US Coachways operates a charter bus service in New York State. But if you want to hire the company to provide transportation for your group, you might have second thoughts. “This company basically ruined what was otherwise a great trip,” wrote one reviewer, who was quoted in a New York Times article last month. The article continues, “Currently, the company has fourteen reviews averaging one star. It is not possible to get much lower than this.”

Sensing the revenue at risk from these negative reviews, Edward Telmany, the company’s CEO, took matters into his own hands. “We get bashed online,” he wrote to his employees in 2011. “We are loosing [sic] money from this.” But instead of improving service, Telmany’s solution was to hire writers to post fake reviews. He even required his employees to post comments on Yelp. One review gave a five-star rating that began, “US Coachways does a great job!” The “reviewer”? Edward Telmany. According to the Times article, “the company agreed to pay $75,000 in fines and stop writing fake reviews.”

Star Scientific. When you don’t have a GL account called Favors to Politicians, just put the expenses in Sales, General, and Administrative. Jonnie Williams, CEO of Star Scientific Inc., a Virginia-based nutritional supplements manufacturer, “contributed $108,448 in corporate jet travel to [Virginia governor Bob] McDonnell’s gubernatorial campaign and political action committee. Williams became even more generous with personal gifts or loans to the McDonnell family that topped $145,000, including five-figure checks to two daughters for their weddings and a $6,500 Rolex watch engraved for the “71st Governor of Virginia,” according to an article in the Richmond Times Dispatch. When the governor’s wife, Maureen McDonnell, flew to New York City to do some shopping, she picked up a $10,000 suede jacket, two pairs of designer shoes, a Louis Vuitton leather handbag, and a designer dress—all on Williams’ tab.

“I admire people who are entrepreneurial, who are finding ways to create opportunities in Virginia . . .” McDonnell said of Williams at the height of their bromance. But Williams’ largesse didn’t come purely from generosity. The Richmond Times Dispatch article reported that “Star Scientific representatives were lobbying senior McDonnell administration officials to include the company’s anti-inflammatory supplement, Anatabloc, in every state employee’s basic health benefits package. The request was denied, and a review by Democratic former Attorney General Anthony Troy found no evidence that either Williams or the company received any benefit, appointment, or other special treatment from state government during McDonnell’s term.”

Still, that leaves people pondering the business relationship—or friendship, if you work in the governor’s office—that has spawned a federal criminal investigation. This past July, McDonnell publicly apologized for accepting gifts from Williams. Once a possible Republican presidential contender, McDonnell has fallen from grace. Rich Galen, a McDonnell spokesman, is bitter. “Apparently, the US government has given Star Scientific a free pass for unspecified misdeeds in return for the testimony of Jonnie Williams.”

“Be a trusted advisor!” “Deliver outstanding customer experience!” “Sales is all about providing value and exceeding customer expectations!”—customer-centric bromides that rattle around the blogosphere. But to a shady executive, they are utterly meaningless. So while most everyone nods and agrees that bad ethics are bad for business, Twain’s point still hits home.

I wonder which companies will be inducted in 2014?

The Road to Sales Is Paved with Positive Intentions

Monday, 25 November 2013 16:45
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In a sales call, which of the following salesperson attributes is completely within the salesperson’s control:

a. Persuasiveness
b. Intent
c. Rapport
d. Trustworthiness

The correct answer is B. Each of the other choices depends on the perceptions of others. Mahan Khalsa, author of Let’s Get Real or Let’s Not Play, described the idea with plainspoken eloquence back in 1999, when his book was first published: “The decision to trust doesn’t start inside [your prospect]—it starts inside of you. Intent is a choice, and your choice will have consequences. You will communicate your intent whether you want to or not . . . Based on your intent, people will decide to trust you or not.”

Not everyone adheres to this idealization. In a blog, 3 Sales Strategies to Build Trust When Your Prospects Don’t Believe You, Jill Konrath wrote, 1) Don’t say anything nice about your product/service, 2) Focus on being helpful in every interaction, and 3) Be truthful, even when it hurts. I can’t quarrel with her recommendations, but they tiptoe around the big beastly culprit behind distrust: bad intentions.

That sounds judgmental, so I’ll tone it down a notch. How about misguided intentions? They are everywhere in selling. Just sit in on a quarterly sales kickoff meeting, and breathe the smoke. Then, venture out into some sales calls. “My intention is to . . . close this deal . . . get this prospect to move to the next step . . . make my quarterly quota . . . keep my job for another year . . . make Club . . . impress my boss . . . make my bonus . . . outmaneuver my competitor . . . prove I can land a big customer.”

On the other end sits the prospect, who perceives the signals that emanate from those intentions. How many truly trust a salesperson who waltzes into a meeting, hellbent on closing the deal? The intention I’d like to see is “creating a mutually-valuable result that brings success to both seller and buyer.” I know it sounds soft and squishy. The same kindly sentiment you’d expect to hear Mr. Rogers say if he were making a sales call in his neighborhood. Hang in there with me, though. Any salesperson who doesn’t hold sincere concern for his or her client’s success isn’t trustworthy. But any salesperson who doesn’t appear to have a reciprocal concern for his own success appears strange—at least to me. “It’s not really important whether you buy from me. I just want to help out.” That seemingly-benign statement gives me the jitters.

A 2012 article from Psychology Today, Positive Intentions Build Workplace Trust, offers three questions to ask about personal intentions:

1. What is your attachment level? The higher your attachment to a particular outcome, the greater indicator of your intention.

2. What is your comfort level? If you’re feeling great about what you’re doing and how you’re doing it, your comfort level, most likely, matches a positive intention.

3. What is your assumption level? Check your intentions by the assumptions you make about others, since we tend to believe people are like us. If you’re well intentioned and trustworthy, you’ll assume most are, too. If you’re not, you’ll doubt others are.

Good stuff, though I disagree with #2. Not a week goes by that I don’t learn about a person with fiduciary responsibility caught stealing from the till. A person can have truly malevolent intentions without experiencing a shred of remorse. To my knowledge, nobody has said, “making those illegal deposits to my personal bank account over the past three years was one of the toughest things I’ve ever done!”

The road to sales is paved with positive intentions. But fostering positive intentions isn’t formulaic. Positive intent requires a combination of empathy, honesty and moral integrity – behaviors anyone can cleanly show in seconds on a PowerPoint slide, but can only be modeled over years of consistent practice.

Many things influence sales outcomes, but positive intentions are one of a select few that are under a salesperson’s full control. When building trust, why squander that important choice?

Selling to TINO: Been There. Done That. Lost the Deal.

Friday, 15 November 2013 01:17
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You just started your sales call with an important prospect, and there’s so much tension in the room you could cut it with a machete. The meeting starts calmly, but rancor quickly invades the dialog. Faces redden, voices rise, people interrupt one another. Finally, ignition. The VP of Marketing stands up and shouts across the table to his boss, “If you can’t get this right, you’re not worth [expletive] as president of this company!”

I think I left my ball-point pen in my car. While I head out to get it, why don’t you meet me in the lobby.

Still with me? Good. Between us, what’s the likelihood that this opportunity will close? Oh, before you answer, I should tell you that this prospect passed BANT (Budget/Authority/Need/Timeframe) with flying colors. Still don’t have enough information? I’ll add one more detail. The executive team is totally dysfunctional. A TINO—Team in Name Only—a term I first discovered in an article by Harvard University Professor of Organizational Psychology J. Richard Hackman. Maybe there’s a better question. If this prospect does buy from you, how long will it take you to rue the day?

Teams coalesce around many needs, from project implementation to innovation to procurement to product development to marketing and sales. Business development executives often assume teams are harmonious and goal-directed, like a corporate phalanx in the battle for market supremacy. Efficient, and ruthlessly effective. But if you’ve worked with TINO’s, you know they will stretch your sales cycles from now to forever, and beyond. They will sap your time and energy. They will chew you up and spit you out. Sometimes, you won’t even be aware until it’s too late.

So why, oh why, do salespeople choose to ignore toxicity when they see it? “Hey! For our executive presentation, we’ll have everyone on the buying team in the same room!” Great! After you’re finished prying their fingers from each other’s throats, you can help them with goal alignment. Sure, TINO’s occasionally buy stuff. But it’s never pretty.

How can you smoke out a TINO? Ask the following:

1. Has the team been given a goal or task that is useful and valued? Hard to know, until you ask. And ask. And ask.

2. How many people are on the team? More can be less. According to Hackman, six-person teams work well. Beyond that, well, start counting connections, and figure out how many emails, meetings, and phone calls could be required to make decisions, let alone synchronize calendars. With six people on the team, there are fifteen connections. Adding Tomas and Akash to that group nearly doubles the connection count, to twenty-eight. (For a real-world example of what happens when a team gets overloaded, please see Is Collaboration Overrated?)

3. How long has the team worked together? Teams that have completed projects together are generally more stable and less risky than those that are an assemblage of new members who have never worked together before.

4. Are team members drawn from different departments? Today, outcomes from corporate initiatives are rarely confined to a single part of an organization. So if you hear “We’re keeping the talent acquisition project within HR for right now,” should you run? Not necessarily, but the project could be killed when others weigh in. “. . . Nobody asked our opinion when they recommended the software. We think we need to go a different route . . .”

5. How constrained are the team’s goals or methods? Goal constraints can be positive for teams. So can method constraints. But morale and outcomes suffer when management dictates both. Being told “here’s what you’re required to achieve,” and “here’s how you’re required to go about it” doesn’t make for a happy team.

6. Does the team have an enabling structure within the organization? It can be fun to watch three-year-olds playing on a soccer field. But it’s not fun to watch equally unfocused thirty-year-olds tackle a marketing project. Look for a corporate sponsor, team leader, resources, goals, and a strategy for reaching them.

7. Is the ‘no [annoying person] rule’ in place? “Our director insists that Denise makes the decision on this initiative. We just don’t want her involved in any of our meetings.” TINO’s often have their fair share of Denise’s.

Budget. Authority. Need. Timeframe. Solution fit. Access to decision makers. Check—times six! With all of that, what could go wrong? Plenty, when you’re selling to a TINO.

Watch Out! The Sunshine Pump Will Swamp Your Company With Toxic Levels of Enthusiasm!

Thursday, 14 November 2013 16:41
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Thanks to good old human optimism, the gambling and wedding industries rack up billions of dollars in annual revenues. It’s reassuring to know that a positive outlook can create so much ka-ching.

But unfortunately, within organizations, unrestrained optimism creates planning nightmares that can drive executives bonkers. Fittingly, we’ve assigned a cheery-sounding name for this phenomenon, The Sunshine Pump.

Sunshine Pump optimism starts its organizational meander benignly, often snaking its way from Sales through Human Resources, over to Operations Planning, gurgling into the C-Suite, then back out, flowing through other departments until finally reaching its terminus, Shareholder Relations. When the pump completes its cycle, the effluent oozes out, making a barely audible noise. It’s hard to duplicate the sound, but here’s my best impression: “earnings were below analyst expectations.”

Let’s trace the Sunshine Pump’s circuitous path from one of its many origins, the District Sales Manager’s opening remarks at the annual sales kickoff: “The Regional Sales VP will be visiting our office this week, and we really want to show her how we’re going to blow out our number. We’ll need to provide her a spreadsheet of the hottest opportunities we’re working on, and you’ll need to book some sales calls so she can accompany you.” The requested spreadsheet has many populated rows, but the booked calls are few. That is the Sunshine Pump—primed, plugged in, and ready to work!

The Regional Sales VP excitedly reviews aggregated numbers on the spreadsheet, while the District Sales Manager rationalizes the paucity of appointments. “A lot of people are still catching up after the winter break.” It’s January 15th. “Thanks,” she says without looking up. “I’ll let Corporate know what you’re working on. Should we go with these numbers for cash planning and procurement?” “Sure!” says the District Sales Manager, “I feel really good about our pipeline.” You probably know the rest of the story.

Along with Sales, other departments operate their own Sunshine Pumps. Product Development’s Quarterly Product Release Roadmap, Marketing’s Market Share Forecast, and the CEO’s Revenue and Profit Projections, to name just a few.

Sunshine Pumps use social networks and personal biases within their machinery. Daniel Kahneman wrote about the first five in his book, Thinking Fast and Slow:

1. Confirmation Bias: I see what I already believe.
2. Anchoring and Adjustment Heuristic: I am influenced by the first piece of information I receive.
3. Ambiguity Effect: I avoid options with unknown probabilities.
4. Bandwagon Effect: I follow the crowd.
5. Availability Heuristic: The story I remember overrides other information I have.
6. Cheerleading bias: I want this outcome. Therefore, I will forecast it.
7. False surety. A roll-up of all of these. “Mike just clicked on the link I sent him, and we had a good conversation. This lead is solid.”

Not every management forecast suffers from being bloated with sunshine. Some people just forecast better than others. In Nate Silver’s new book, The Signal and the Noise, forecasters are divided into two archetypes, Foxes and Hedgehogs. Foxes are “tolerant of complexity,” he writes, able to “see the universe as complicated, perhaps to the point of many fundamental problems being irresolvable or inherently unpredictable. They express their predictions in probabilistic terms and qualify their opinions.” Hedgehogs, on the other hand, are “order seeking,” and “expect that the world will be found to abide by relatively simple governing relationships once the signal is identified through the noise . . . They take a prejudicial view toward the evidence, seeing what they want to see and not what is really there.”

Most Sunshine Pumpers are Hedgehogs. They search for articles containing the words “the answer is simple . . .” Ironically, it’s the Foxes who are often called out for not being “team players.” “Don’t tell me what you might sell, I want to know what you will sell!” Go figure.

“Wherever there is human judgment there is the potential for bias,” according to Silver. “The way to become more objective is to recognize the influence that our assumptions play in our forecasts and to question ourselves about them . . . You will need to update your forecast as facts and circumstances change. You will need to recognize that there is wisdom in seeing the world from a different viewpoint. The more you are willing to do these things, the more capable you will be of evaluating a wide variety of information without abusing it.”

Every company can benefit from pumping a steady trickle of sunshine. It’s essential for morale. But watch out. When you’re pumping sunshine, a trickle of optimism can quickly become a torrent.

How to Help Your Prospect Define a Business Problem or Challenge

Thursday, 14 November 2013 16:36
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Albert Einstein said that if given one hour to solve a problem, he would spend 55 minutes defining the problem, and five minutes finding the solution. In business development, we execute this in reverse: A minute or so to define the problem, and months—or longer—to formulate and sell a solution. Figuring out problems is anything but easy. Odd, since we’re swimming in them.

Ask any senior manager at Sony of Japan, whose executives organized strategy around answering “how do we sell more devices?” Compare Sony to Amazon, whose management asked “how do we sell more books?” “As a result, the Kindle, which had wireless service and a broad book selection, was more in tune with the raison d’etre for purchasing the device: to buy and read books,” according to The Wall Street Journal (How Japan Lost Its Electronics Crown, August 15, 2012). Other electronics companies whose gadgets you once enjoyed, such as Japan’s Sharp and Panasonic, have similar stories. You can read about them by simply downloading content to your iPad or Kindle e-reader. At least for now, we still associate Japan with other products, like cars and sushi.

Sony-think infects healthcare policy, too. In The Blue Sweater, author Jacqueline Novogratz writes, “So often we ask ourselves the wrong question. When it comes to a disease like malaria, the question should not be whether bed nets (to protect people from mosquitoes) are sold or given away free. Both distribution methods have their place in a broader attack on the disease. The question instead is, ‘What does it take to eradicate malaria?’ It’s not ‘either-or,’ but rather ‘both-and.’” And she chafes when people harangue over whether access to water is a human right, or whether it’s fair for companies to profit by selling it. Instead, she argues that the real issue is how to get water to people who need it.

If she listened in on almost any B2B sales call, she’d go ballistic. We often don’t see The Bigger Picture. “This prospect’s key problem is . . . preventing cyber-attacks! . . . getting more customer engagement! . . . ensuring brand loyalty! . . . creating ‘killer’ content! . . . printing barcoded labels with a 99.9999% read rate!” Your CMO would be ecstatic. “The sales force really gets our messaging!”

Kudos. But some product hype can become a sales liability, for which we’ve coined a well-worn metaphor: “If all you have is a hammer, everything looks like a nail.” I imagine that as passengers on the Titanic we would merrily exclaim, “Gee, these plummeting deck chairs could really use our patented slip-proof traction pads!” You could give your sales pitch while clinging to a piece of debris. Here comes one floating by right now: “We evaluated your proposal, but it doesn’t exactly address our real problem.” Ouch.

How can business developers identify and define central problems?

1. State the perceived problem multiple ways until you arrive at one that seems right. “How do we sell more devices?” and “How do we sell more books?” are similar questions, but the resulting strategies could not be more dramatically different.

2. Avoid using consultant-isms. Problem statements aren’t visceral when they contain words like optimize, monetize, or proactive. “A key challenge for our customers is how to optimize ROI.” Not really. A more likely central challenge is how to acquire new customers or capture new revenue.

3. Share assumptions, challenge them, and get everyone on the same page. Sony’s assumption, that people wanted to buy devices, was a poor one.

4. Find a symptom, then go upstream. Figure out why the symptom matters. And why that matters. And why that matters . . . Preventing cyber attacks might have everything to do with acquiring new customers and achieving financial goals. Who knew?

5. After going upstream, go downstream. Ask “. . . when that happens, what are the consequences?”

6. Examine problems from different angles. When barcoded labels have poor print quality, how is that issue experienced from the point of view of your customer support representative, your sales account manager, the receiving clerk at your client’s warehouse, your Chief Logistics Officer . . .

7. When there are conflicting interests, find common ground—then define the problem. After the horrific shooting in Newton, Connecticut last December, there were many opinions about the overarching problem. How to limit or restrict assault weapons. Whether to ban high-capacity ammunition magazines. Whether to arm teachers and school administrators. How to create greater access to mental health services. How to identify violent proclivities in young males. Each one, a potentially polarizing issue. But finding the best way to protect our nation’s young children has become the issue around which most people can coalesce.

8. Get nitpicky—real nitpicky—about semantics. Rather than define a problem as “How can we eliminate low productivity in manufacturing?” ask “In what ways can we improve our manufacturing lead time?” The second statement has a positive tone, and assumes more than one viable answer could be identified.

9. Make the issue exciting. Although this can be difficult, cut out bureaucratic language. Imagine getting others on board with “How do we best establish policies to ensure that citizens are provided infrastructure for accessing drinking water?” versus “How do we get water to people who need it?”

10. Reverse the problem. If figuring out how to win more pipeline opportunities throws you, ask “In what ways can we reduce or eliminate the top five causes for lost opportunities?”

Researchers have long understood the importance of aligning studies to meaningful questions. Especially true when data was scarce and expensive. But today with gobs of Big Data, it’s common to say “we produce information because we can!” According to Digvijay Lamba, a data architect at Walmart Labs, “The big question we ask ourselves as retailers is ‘What should we really sell on Halloween [or other holidays].’ . . . Now we have all this external data that is being generated. . . and we can ask all kinds of questions.” (It’s All about the Platform: What Walmart and Google Have in Common, MIT Sloan Management Review, December 5, 2012)

Nifty, if you first correctly define the problem that must be solved.

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