Tag Archives: sales_strategy

Six Strategies for Managing Revenue Risk

When you boil off the ancillary stuff that business developers do, four distinct objects remain:

1. Capture: Acquire new customers
2. Maintain: Keep current customers happy
3. Grow: Encourage customers to increase spending with your company
4. Reclaim: Win back former customers

No mere coincidence that the word customer appears in each one. This indicates the basic element has been revealed. Time to stop boiling.

The problem is that the slew of activities involved in augmenting the Income Statement’s top line have obscured these fundamental objectives. For revenue generation, organizations now employ specialists for direct selling, indirect selling, measuring, forecasting, dashboarding, best-practicing, comparing, spreadsheeting, analyzing, planning, content developing, press releasing, training, storytelling, elevator pitching, and social-media-ing! How did this happen? Discuss . . .

Driven to distraction.
“The sales models for many large companies have become more complex and less efficient, putting pressure on profit margins,” a Bain & Company survey explained. Using financial data between 2003 and 2011, Bain compared the income statements of about 200 US healthcare, technology, and financial services companies. “More than half of these companies had increasing sales and marketing expenses as a percentage of revenues over the period, or they failed to demonstrate the scale benefits that one would expect from their growing size.”

Sales pundits offer a reason for this by proclaiming that customers have suddenly become “more demanding than ever.” That’s an illusion designed to induce panic, sell services, or both. Customers are not more demanding. They have demands that are new and different, which throws vendors for a loop. Bain attributed the increased cost percentage to four emerging buying trends:

1. Customer needs becoming more sophisticated, evidenced by faster revenue growth in vertical industry solutions over general enterprise systems.

2. Customers defining value as derived from outcomes or results, rather than in simply receiving the lowest price.

3. Customers becoming more experienced conducting disciplined, competitive bid processes.

4. Customers becoming more wary about risks of incurring high switching costs.

These trends complicate almost every activity between trading partners. More intricate, collaborative processes for buyers drive congruent challenges for sellers. And for both, increased transaction costs, and greater risks. For B2B vendors, longer sales cycles and less predictable outcomes have become the new normal. Not everyone is upset. These problems represent red, billable meat for strategy consulting companies, which predictably promise “solutions” by positing new, box-intensive revenue frameworks.

Here’s one from PwC: The Sales, Channels & Distribution Diagnostics Framework. Despite the impenetrable title, multiple layers, lots of arrows pointing left-to-right and top-to-bottom, and odd categories under the Sales Technology Solutions stack (CRM Solutions/ Sales Portals/ Channel Integration Solutions/ MIS/ Sales Dashboards), it’s a useful visualization that takes a spaghetti bowl of cross-departmental projects, and organizes them into a concise, linear arrangement.

It’s easy to believe that adopting a more complex selling framework offers salvation from revenue calamity. But without knowing a company’s current situation, it’s hard to know whether that’s true. Regardless which selling model or framework your company uses or chooses to implement, expect to encounter a unique collection of risks. Some familiar, some brand-spanking new. For mitigation, consider one or more of these risk strategies:

1. Accept. Many executives regard risk as something to get rid of. But every business strategy involves risk acceptance. The challenge is knowing which are appropriate. For example, any company unable to accept the risk that a sales opportunity might fail is not market-ready. So for commercial organizations, the possibility of losing a deal is an appropriate risk to accept. From there, the question becomes how much capacity the company has for failed opportunities.

Examples of risk acceptance:
• “We expect that [X%] of our pipeline leads will not result in a sale.”
• “We’re going to monitor trends X, Y, and Z. But for now, we’re not mitigating their risks.”
• “We have budgeted [X%] of gross sales for Bad Debt Allowance.”

2. Reduce. This is the most common approach to revenue risk. After all, when it comes to risk, shouldn’t less be better? Maybe. Yet, some companies want the very risks that other companies willingly chuck over the fence. In fact, entire companies have been built on this idea. Who can’t think of an entrepreneur or two that has created a business by providing an effective solution for the difficult or hard-to-serve customer?

Examples of risk reduction:

• “We are tightening our lead-scoring requirements before handing opportunities to Sales.”
• “We are increasing our sales pipeline multiplier.”
• “We are conducting background checks on all of our new hires.”

3. Eliminate. Some risks can be so catastrophic – bad ethics, for example – that they exceed a company’s capacity to bear them. But eliminating a risk is rare, because it means crushing it to zero probability. When getting rid of a risk is the objective, often the best that can be achieved is making it a very, very low possibility.

Examples of risk elimination:

• “No orders will be shipped without payments clearing in advance.”
• “Moving forward, we’re discontinuing all channel sales and adopting a direct model.”
• “Our CRM system will not advance an opportunity to the next stage until we know [X.]”

4. Share.
Some risks are too great for a single company to sustain, but they can become feasible when shared between two or more entities. This often occurs with co-development agreements between trading partners, or when projects are underwritten by other investors. Risk sharing occurs on the operational level, too. When a company cannot afford a salaried sales rep in a territory, the arrangement might become possible when base pay is lowered, and commission percentages are increased.

Examples of risk sharing:

• “We are engineering this new energy technology with a consortium of trading partners who will have exclusive rights if we are successful.”
• “Our reseller contract provides protected territories to our exclusive channel partners.”
• “Our suppliers have revenue incentives if we meet our target sales volumes.”

5. Transfer. This strategy is increasing, because companies have discovered rapid growth is possible through operating with few employees and scant physical assets. New business models are emerging where risks have been offloaded, and shifted to different entities in the value chain. Recently, one – AirBnB – has even become profitable!

Examples of risk transfer:

• “We are outsourcing our software development to a third-party company.”
• “Sales quotas are going up.”
• “All of our sales representatives are independent and work on full commission.”

6. Pool. As the name suggests, risk pooling is used for combining a large amount of similar risks into a single group. The rationale for risk pooling is that positive and negative spikes in variability tend to offset one another, thereby diminishing the impact, and lowering costs. Risk pooling is often used in supply chain applications where central warehouses might be used to consolidate inventories from satellite facilities, decreasing the investment in safety stock.

Examples of risk pooling:

• “We’re providing our reps a team incentive bonus if the territory meets its revenue target.”
• “Our strategy is to provide a horizontal software solution.”
• “To make quota, every rep must maintain no fewer than [X] qualified opportunities at any time.”

“The purpose of business is to create a customer,” Peter Drucker said. In a complex world, I find the simplicity refreshing. But all around Drucker’s straightforward idea swirls a constellation of risks. Don’t ignore them. Accept the right ones, and use this arsenal of choices for dealing with those that are consequential.

Cross-selling Is Not Evil!

You can’t read or hear anything about Wells Fargo without cross-selling popping up.

“At Wells Fargo, apparently, the solution in recent years was aggressive ‘cross selling’ of its existing customers – that is, urging them to open credit card accounts to go with their checking accounts, and so on, in order to generate more fees,” The Washington Post said in a September 22d editorial, Accountability at Wells Fargo.

OK. Now, tell us what Wells Fargo did wrong.

That’s a longer sentence. Here it is: “At Wells Fargo, apparently, the solution in recent years was to reward senior management with enormous bonuses tied to stock price appreciation regardless of the strategic and ethical risks, allowing them to set excessively high performance targets for low-paid sales staff, align pay incentives with sales goals unrelated to customer satisfaction, crush internal dissent, and emasculate internal audit controls.” Yep – That pretty much sums it up!

But that’s complicated, and it doesn’t sell newspapers, or bring eyeballs to a webpage. So cross-selling stays in lead sentences and headlines, carrying disdain that will now be hard to shake. If I were unfamiliar with business development, I might mistakenly think of cross-selling as a deviant or manipulative behavior, like getting the prospect to say ‘yes’ three times, or the reviled assumptive close.

That’s unfair. Disclosure: I’m a cross-seller, and have been for many years. Cross-selling is “the action or practice of selling an additional product or service to a customer,” according to Wikipedia. As a software salesperson, I cross-sold hardware, software, services and third-party products. As an account executive with an auto-ID manufacturer, I cross-sold products from different divisions in my company. And I cross-sold services that my VAR’s (Value-added Resellers) provide. No one was harmed. Laws were not broken. In fact, my customers loved the convenience, and the revenue was credited to my quota. My W-2 and 401K became flush with dinero. Life is good!

Cross-selling offers substantial benefits for vendors, especially for large, diversified companies with multiple-divisions calling on the same buyers or decision makers. With cross-selling, they can reduce overhead and redundant systems. Buyers gain efficiencies, too. With cross-selling, they can work with account teams that have a “big-picture” view, and don’t need to schedule multiple meetings with reps from uncoordinated business units within the same company. What makes Wells Fargo’s actions reprehensible wasn’t that they engaged in cross-selling, it was how they did it.

Expect more cross-selling, not less. When customers implement projects and systems, they buy many interdependent technologies and services. Some vendors provide end-to-end solutions, but their complexities mean that few salespeople can possess all the required knowledge. They must collaborate internally and externally, and for that reason, cross-selling makes sense. So does paying salespeople for engaging in it – when customers benefit. That’s touchy, so I’ll widen the strike-zone: as long as customers are not harmed.

The right question to ask is not, “how do we restrict cross-selling,” or even “how do we prevent cross-selling from hurting customers?” It’s “how do we identify and mitigate situations when management has the opportunity to gain substantial compensation, but might unfairly harm employees and customers in order to obtain it?” Put another way, “when management has access to a cash cookie jar, how do we prevent them from screwing everyone over when they’re stuffing their hands into it?” Boards – are you listening?

One of the rules regulators are now considering is a “requirement for the biggest firms to claw back bonuses from employees engaged in misconduct that results in significant financial or reputational harm or any fraud. Those proposed rules would require banks to take back pay for wrongdoing for at least seven years after the executive receives the payment,” Yuka Hauashi and Christina Rexrode wrote in The Wall Street Journal on September 20th (Hearing to Amplify Ruckus Over Pay). It’s a good rule that makes sense not only for financial services, but for any industry.

A failsafe regulation would be peachy, but I’ll settle for reducing the risk that no more John Stumpfs (Wells Fargo’s CEO) will be allowed at the controls of a major company. As Holman W. Jenkins Jr. wrote in his column, Wells Fargo’s Incentives Go Awry, “All companies operate on incentives and systems that are not perfect. Comcast means for its ‘retention specialists’ to win back irate customers, not bully them in ways that end up on YouTube. Yet it happens.”

Consumers won’t be protected through more scrutiny over cross-selling, or from curtailing it, but we can make things better by getting rid of some damaging practices:

1. Committing to lopsided bonus structures that enrich individuals, not the company.

2. Providing low wages for wages for salespeople, and making subsistence income contingent on achieving “stretch” goals, or on meeting performance metrics that are extraordinarily difficult.

3. Heaping sophomoric praise on salespeople for “busting quotas” and “crushing their numbers,” without considering whether they have been ethical.

4. Assuming that salespeople “thrive” on pressure, as one popular blogger wrote. That’s a myth. Plenty of salespeople face pressure, but when there isn’t an upside for them, it’s hard to describe that as “thriving.” More accurately, salespeople with pay at risk (commission) have – or should have – a congruent tolerance for uncertainty.

5. Assuming that good salespeople will always find a way to make goal – no matter the odds. The sentence is mostly correct – just change good to clever.

6. Letting what happens in sales stay in sales. Companies must begin to have ongoing governance over their sales processes, or suffer the consequences when poop hits the fan.

Concern over cross-selling is misdirected. If you’re looking for the real culprit in Wells Fargo’s case, you will find it in the emergence of a trend: executive pay tied to stock price appreciation. “Changes like these are directly responsible for CEO’s seeing a 15-fold increase in comp in the last 40 years,” said Bobby Parmar, professor at the University of Virginia’s Darden Graduate School of Business Administration.

Parmar says that boards rationalize for fulfilling an obligation to grow and protect shareholder value. But he says this is based on flawed assumptions. “Shareholders don’t own the corporation. Public companies own themselves. Shareholders own a contract called a share. There is no legal reason to put shareholder interests above anyone else. It’s a choice, but not mandated. There is no legal duty to maximize profit. As long as executives aren’t violating the law, the courts won’t interfere with their decision making . . . Across hundreds of studies, there is no evidence that companies that maximize shareholder value are more profitable.”

That’s not what I was taught in B-school, and I have little doubt that many vociferously disagree. But Parmar is right. It’s the relentless goal of growing revenue and the myopic pursuit of share price appreciation that ultimately creates substantial stakeholder wreckage.

A huge relief to cross-sellers. Now, you can come out from your hiding places. Be proud of what you do, and who you are!

Disclaimers: A Slick Way to Kind of Tell the Truth

In 2013, Pakistan’s Tribune newspaper reported that a Pakistani family can spend the equivalent of $9,600 to provide a marriage dowry for a daughter – a fortune in a country where the average annual per capita income is $1,200. Sons, on the other hand, occupy the catbird seat. For them, no dowry payments, just an expectation that they care for parents into old age. “We always knew we wanted a boy! . . .”

“In Pakistan, India, and China, son preference is perpetuated by both men and women,” said Dr. Anita Raj, director at the Center on Gender Equity and a health professor at the Division of Global Public Health, Department of Medicine at the University of California, in San Diego, quoted in a report from the International Business Times. “Data from the region [indicates] that about one in four women would prefer to have more sons than daughters.”

In places where the birth of a female child creates outcomes far more dire than what color to paint the nursery, the verb prefer shrouds the draconian choices parents face. And it obscures how vulnerable they are to commercial exploitation. Wherever you find desperate consumers, you find purveyors of snake oil, gleefully willing to take their money – and more.

One vendor, Indian yoga guru Baba Ramdev, developed a nutritional supplement he named Divya Putrajeevak. Putrajeevak, a Sanskrit word meaning “son’s life,” provides a distinct marketing advantage – no need to guess why. You can buy it on Amazon. “A unique herbal product, Putrajeevak seed is beneficial for female reproductive health. Dosage: Make a fine powder of both Putrajeevak seed (Beek), take an hour before breakfast & dinner,” Amazon’s product description helpfully informs us.

But just below it, the first review hints at a dark story. “This product is for health of female reproductive organs. Nothing more. Some people confuse it as for conceiving boy child but it’s due to the naming in Sanskrit,” this customer writes, adding, “This is a reputed herb in Ayurveda. Use as directed. I have used it personally. But please refrain from using after conception. This herb is for before conception.” I scroll to the next review: “This is 100% quackery. Please don’t buy any of the items Baba Ramdev is selling! He doesn’t have any scientific basis to make all these claims.”

The claims this writer refers to were made in India, where the pitch to sell ‘Divya Putrajeevak Seed’ unrepentantly includes the promise of conceiving male offspring. According to an article in eninews24online.com, “The medicine also created a uproar in Rajya Sabha [India’s Council of States] . . . after Indian Member of Parliment KC Tyagi flashed a packet labelled ‘Putrajeewak Beej’ (son-bearing seeds).” Ugh. First of all . . . please don’t call this product medicine!

To save space, I’ll dispense with a biological explanation for how gender gets determined in humans. You can read about it here. Suffice to say, I couldn’t find any credible research offering proof that eating, drinking, or smoking Divya Putrajeevak seed means diddly squat toward producing the all-important boy-bearing XY chromosome.

Right here, you might be thinking, “Sounds like this product needs a disclaimer.” You are right. Following this brouhaha in India, a spokesperson for the company that sells Divya Putrajeevak seed announced that the product packaging will disclaim exactly what the product name implies.

“It is for women, and has no relation with sex determination.”

Problem- solved! Now, in South Asia, destitute consumers and others at the brink of financial disaster can buy “son-bearing seeds,” but without the misapprehension that the product will help them conceive a male child. Please let me know if this doesn’t make sense.

Here in the US of A, we have plenty of our own mishegoss. For example, in 2015, law firms spent $128 million on 365,000 ads like this: “This is a legal alert for the users of Xarelto. Lawyers are reviewing claims that the blood-thinning drug can cause severe bleeding or hemorrhaging, stroke or even death. You may have a case . . .”

If you use Xarelto, could this ad make you a tad skittish? In a survey conducted by the US Chamber Institute for Legal Reform, “25% of patients said they would stop taking their medication immediately if they saw an advertisement regarding litigation over the drug,” Lisa A. Rickard wrote in an August, 2016 Washington Post article, How Lawyers Scare People Out of Taking Meds.

According to Rickard, the chamber organization’s president, “Ads like these often include extensive descriptions of serious adverse reactions with little context about how common these side effects are. They routinely mimic public-service announcements, claiming to be a ‘medical alert’ or an ‘FDA warning.’ Most don’t disclose that the ad is for lawyers until the final few seconds. One researcher sampled these promotions and found that only 39% warned viewers to consult a doctor before stopping a drug (emphasis, mine). Many that did ran that advisory in very small print.”

“Lawyers argue that these ads are an important part of the work they do fighting for people injured by faulty drugs or devices . . . lawsuits offer victims opportunities for justice,” Rickard wrote. But without regulations, these alarmist ads create their own “public health risk” – the term Albert Einstein College of Medicine cardiologist Evan Levine used to describe the problem. I’m with him.

Since 1962, The US Food and Drug Administration has had “complete oversight over prescription drug advertisements,” Rickard wrote. “Similar regulations could be developed for legal ads . . . lawyer medical ads should remind viewers to consult their doctors before they stop taking their medications. Another option: The ads could include some kind of disclaimer noting that only a small percentage of people may have had an adverse reaction to a specific drug. All claims should be backed by science, and not exaggerate risks.”

When I read that passage, I did a double-take, because I assumed that such sensible disclaimers were already mandatory. Nein! So, don’t buy the popular bombast that politicians regularly hurl about “cutting regulation and rolling back bureaucratic red tape.” To me, this example demonstrates that without Government Nannies, humans would be nearly extinct.

Companies use disclaimers to avoid allegations of mendacity, or when regulators force them to. Disclaimers are disavowals, a simple shorthand for communicating, “We flamboyantly distort facts so you will see things the way we want you to see them. In case that causes a problem, here’s a half-hearted smattering of contradictory information.”

Some disclaimers are so common that we barely pay attention. “Your mileage might vary . . .” . . . “Certain restrictions apply . . .” “Enlarged to show detail.” Others are ironically funny. In a January, 2015, Wall Street Journal article, Advertising Hyperbole Is Best Found in the Disclaimer, Shirley Wang wrote, “On the big trucks featuring three giant cups of [Dannon’s] Oikos brand Greek Yogurt in Times Square recently, there was a message repeated in several places: ‘not representative of product.’ IKEA stresses on several-foot-high signs that hang from the rafters of some stores that the mammoth picture of its beef hot dog is ‘not actual size.’ And online ads for Dermitage, a skin product that touts ‘less wrinkles in only minutes,’ have shown half the face of a woman with smooth skin and the other half with serious wrinkles, noting that it was ‘simulated imagery.’ No, they don’t think you are an idiot.”

“How weight-loss companies fake those before-and-after photos. Pictures are airbrushed, borrowed and stolen,” the UK’s Daily Mail reported. No kidding! Another prime opportunity for a well-crafted disclaimer. The one that the diet regimen Paleo Plan uses, “never disregard professional medical advice or delay in seeking it because of something you have read on this website,” could not be more encompassing. Good to know.

In September, 2014, the US Federal Trade Commission (FTC) took up the honesty cause through Operation Full Disclosure , a program designed to prevent companies from misleading consumers. The project began with the FTC contacting 60 companies, including 20 of the 100 largest US advertisers. Among the distortions that the agency wanted to thwart:

• ads that quoted the price of a product or service, but did not adequately disclose the conditions for obtaining that price

• ads that failed to disclose automatic billing

• ads that claimed a product capability or that an accessory was included, but did not adequately disclose the prerequisite to own or buy an additional product or service

• ads that claimed a uniqueness or superior feature for a product in a certain category, but did not adequately disclose how narrowly the advertiser defined the category

• ads that promoted a “risk-free” or “worry free” trial period, but did not adequately disclose that consumers would need to pay for initial and/or return shipping

• ads that made absolute or otherwise broad statements and had inadequate disclosures explaining exceptions or limitations

• ads for weight-loss solutions featuring testimonials claiming outlier results that did not adequately disclose the weight loss that consumers generally could expect to achieve

• ads that did not adequately disclose issues related to the safety or legality of a product or service

• ads that included a demonstration that was materially altered, but did not adequately disclose the alteration

and finally,

• ads that made false claims that the advertisers attempted to cure with contradictory disclosures, which are not sufficient to prevent ads from being deceptive

That factual distortions exist in marketing should surprise no one. But the transgressions the FTC has targeted are particularly corrosive – even dangerous. “The FTC’s longstanding guidance to companies is that disclosures in their ads should be close to the claims to which they relate – not hidden or buried in unrelated details – and they should appear in a font that is easy to read and in a shade that stands out against the background. Disclosures for television ads should be on the screen long enough to be noticed, read, and understood, and other elements in the ads should not obscure or distract from the disclosures.” It’s hard to argue that the FTC’s recommendations are bad.

The FTC has also developed guidelines for digital media: “If a disclosure is needed to prevent an online ad claim from being deceptive or unfair, it must be clear and conspicuous. Under the new guidance, this means advertisers should ensure that the disclosure is clear and conspicuous on all devices and platforms that consumers may use to view the ad. The new guidance also explains that if an advertisement without a disclosure would be deceptive or unfair, or would otherwise violate a Commission rule, and the disclosure cannot be made clearly and conspicuously on a device or platform, then that device or platform should not be used.”

Disclaimers have a useful purpose, but they seem an awkward way to backpedal toward the truth. A tacit admission of deception. “Please be aware that what you likely heard me say is not necessarily accurate or correct.” Companies want to be thought of as “truthful and honest.” They see profound purpose in “educating customers.” Sales managers pride themselves on having reps who are “trusted advisors.” Disclaimers, in effect, tell customers that what they have been told, shown, or made to believe isn’t exactly as it seems.

As Wall Street Journal columnist Holman W. Jenkins described it in a recent column about Donald Trump, (Trump Runs Against Both Parties, August 10, 2016), “When you tell the public untruths, in Mr. Trump’s understanding of business, that’s marketing.”

Disclaimers, to the rescue!

Selling: Six Audacious Companies to Watch

“The future ain’t what it used to be,” Yogi Berra once remarked. A perfect advertising tagline for the nascent companies profiled in this article. For them, there’s no staying the course because there’s no course to stay. Their executives can’t use tried and true marketing tactics, and they can’t depend on what’s worked before. Their most basic sales assumptions could spark contentious debate, and the outlook for success is unclear. To survive, these companies must innovate marketing and sales strategies as they progress.

If there were a Mission: Impossible movie about selling, these executives would hear, “Your mission, should you choose to accept it, is to make quota without guidance from past performance indicators, industry best practices and benchmarks, or sales playbooks. As always, should you or any of your biz-dev team get fired or laid off, the VC’s will disavow any knowledge of your actions. Your company might self-destruct within four planning periods. Good luck!”

Memphis Meats

Opportunity: “Beef cattle production requires an energy input to protein output ratio of 54:1,” according to researchers at Cornell University. I suppose if I wanted to extend this perverse sustainability model, I’d drive to my local Wendy’s in a Lamborghini Aventador Roadster (12 MPG combined city/highway) and buy a Quad Baconator. No need to shut off the engine while I’m inside eating. I want that A/C blowing cold when I get back to my car!

“More than half the U.S. grain and nearly 40 percent of world grain is being fed to livestock rather than being consumed directly by humans,” Cornell’s Professor David Pimentel said back in 1997. “Although grain production is increasing in total, the per capita supply has been decreasing for more than a decade. Clearly, there is reason for concern in the future.”

Here is where Memphis Meats smells opportunity. Instead of raising and slaughtering livestock, Memphis Meats creates food off the animal, by “growing real meat in small quantities using cells from cows, pigs, and chickens,” according to the company’s website. And unlike raising livestock for slaughter, the company claims it gets one calorie of “output” from just three calories of “input.” No “Concentrated-Animal-Feeding-Operations” fraught with pathogens, feces, and antibiotics. Think “clean meat” – the utopia that Upton Sinclair might have envisioned when he wrote The Jungle.

Audacious sales challenges: “First, consumers will have to be educated as the ‘ick’ factor will be tough barrier to overcome. And one study has suggested that lab-produced meat may actually require more energy than farmed meat, so those statistics need to be sorted,” Leon Kaye wrote in a 2016 article, Memphis Meats Bets Lab-grown Meat Can Disrupt the Global Food Supply.

Great quote from the website: “With our home-base in the San Francisco Bay Area, but strong roots in Memphis, Tennessee, we’re using the innovative spirit of Silicon Valley coupled with the rich culinary traditions of the American south to provide better meat for the entire world.” – Now that’s a cosmopolitan meatball!

My advice – no extra charge! “What has to come first is truth” regarding the benefits that come from the company’s products, Eric Stangarone of Foodthinking.co, told me in an interview for this article. “The moment consumers believe the company is pushing nutritional snake oil,” he said, “they will be turned off.”

Peloton Cycles

Opportunity: A peleton is the main group of riders in a cycling race, the company’s website explains. That definition hints at Peleton’s big sales pitch: Athletes can improve results and increase performance when others are actively involved in the workout. Call it Exercise 2.0 – what you get when your bike has an IP address, and you can experience the camaraderie of friends pedaling in place at the exact same time you’re pedaling in place. There’s more. Peleton’s videos show moms and dads working out in gorgeous homes, conspicuously free from clutter, gnats and mosquitoes, oppressive humidity, mud and dirt, and the omnipresent stench that accompanies Pilates class with eighty or more sweating humans packed in a small room. Exercise, comfortably. A grand idea! Not a bratty kid or gym stalker in sight to disrupt a workout. With Peleton, once the kids are tucked in bed, dad can seize 30 minutes of quality time to work out with his cycling buddy three time zones away.

Audacious Sales Challenges: Price. And the ephemeral nature of The Best Exercise Intentions. Peleton cycling machines sell for nearly $2,000, plus $39/month for a subscription to video rides. And you must commit to one year of them. The company gives skittish buyers a prominent reassurance, Financing available, near the ‘add to cart’ button. Not surprisingly, the company’s showrooms are ensconced in some of America’s best neighborhoods, including Corte Madera CA, East Hampton NY, Manhasset NY, Newport Beach CA, Short Hills NJ, White Plains NY, and Tyson Corner VA. That says a lot about the company’s target buyer.

Great quote from website:
“Ride now, pay later.” – No kidding!

My advice – no extra charge! Grow the community first – and fast! Consider offering customers a social media experience, but without having to buy the bike right away. As it stands now, Peleton is a premium exercise bike, with benefits. Namely, real-time access to friends and rock star coaches using the same apparatus.

Local Motors

Opportunity:
“I want to start a Company that will re-invent semi-recent cars to embody the design esthetic of the cars of the 50s and 60s,” User marcuslaun posted on the Local Motors website in June, 2016. Marcuslaun doesn’t work for a car company – yet. But Local Motors takes his aspiration seriously, and they have developed a platform to help him produce a hydrogen-powered, snap-together simile of a 1954 Corvette – if that’s what he wants to do.

Local Motors is a technology company that designs, builds, and sells vehicles by combining global co-creation with local micro-manufacturing. It’s hard to describe what LocalMotors does without slipping in tech jargon, like Direct Digital Manufacturing, or DDM. If you don’t have time to bone up on the details, you should know that “DDM uses 3D computer-aided design files to drive the computer-controlled fabrication of parts,” according to Larry Schuette and Peter Singer (Direct Digital Manufacturing: The Industrial Game-Changer You’ve Never Heard Of, Armed Forces Journal, October 10, 2011). In June, 2016, Local Motors introduced Olli, the first self-driving vehicle to integrate the advanced cognitive computing capabilities of IBM Watson.

“At Local Motors, we are hell-bent on revolutionizing manufacturing,” said John B. Rogers, Jr., CEO and co-founder of Local Motors. “Car manufacturers have been stamping parts the same way for more than 100 years. We now have the technology to make the process and products better and faster by linking the online to the offline through DDM. This process will create better and safer products, and we are doing exactly that.”

Short time to market, low manufacturing overhead, and open-source design – three proprietary advantages that could leave larger manufacturers in the dust.

Audacious Sales Challenges:
Capitalization to fund R&D, expanding university partnerships, and developing brand equity.

Great quote from website:
“We are Local Motors. And the world is full of companies nothing like us.” – Wow. Most websites don’t get that existential.

My advice – no extra charge! Champion the Maker Movement. There are millions of people brimming with ideas and engineering talent who don’t work for the world’s car companies.

Modumetal

Opportunity:
“Since the Bronze Age,” the company’s website tells us, “advances in metals technology have involved two things: modifying chemistry and modifying microstructure. In thousands of years, that hasn’t changed, until now . . . Modumetal is creating a revolutionary new class of nanolaminated materials that will change design and manufacturing forever by dramatically improving the structural, corrosion and high temperature performance of coatings, bulk materials and parts.” Translation: Modumetal’s technology makes it possible to grow metal using electricity – not heat – as the primary input. And those materials can have highly specialized characteristics compared to traditional metals.

While I’m not one to shriek “disruption!” before the fact, Modumetal’s innovation portends profound changes for the industry, including where metal can be manufactured, the sizes of production runs, and the serviceable life of parts deployed in the field.

Audacious Sales Challenges: Protection of Intellectual Property (for Modumetal, there’s no such thing as over-protecting engineering information); scaling production.

Great quote from website: “The company’s manufacturing process for nanolaminated metals – think metallic plywood with really thin layers – is also a breakthrough, able to deliver materials at a cost that is competitive with conventional alloys.” – That’s a shining example for how to make a complex technology approachable!

My advice – no extra charge! There are many opportunities for Modumetal to provide value and benefits, and it’s easy for Sales to get distracted. Especially now, stick to developing customers in the most profitable segments.

Pembient

Opportunity: In 2015, 1,215 rhinos were poached in South Africa alone. In 2007, that number was just thirteen. The reason is the precious horn, which is “more valuable by weight than gold, diamonds or cocaine,” said William Ripple, an Oregon State University professor of ecology, who published a study. The current value: $60,000 per pound. Demand from Asia has contributed to the scarcity. “In a survey in Hanoi and Ho Chi Minh City in 2013, 37.5% of respondents said that rhino horn can help treat cancer,” according to The Economist (A Dilemma of Horns, August 8, 2015). For rhinos, the threat of extinction accompanies this explosive market demand. In addition, the poaching method is particularly cruel, involving tranquilizing the rhinos before the horns are harvested. Most of the animals die from blood loss or suffocation.

Pembient aims to replace the illegal wildlife trade, a $20B black market, and the company has tackled the problem from the supply side. “Next year it will begin selling synthetic rhino horn for $7,000 a kilo. This will undercut the market for the real stuff, says CEO Matthew Markus. Others, though, fear that advertising synthetics may boost sales of real horn,” according to The Economist. In 2015, Pembient was one of eleven companies admitted to the inaugural class of IndieBio, a San Francisco-based biotech accelerator (IndieBio also funds Memphis Meats, profiled earlier in this article).

Audacious Sales Challenges: Making sure the basic pricing assumptions play out in the market; convincing buyers that the fake product is better than the real thing (studying the history of faux fur might help).

Great quote from website: “Subscribe for updates on our progress.” – Clearly, Pembient does not anticipate that success will happen overnight.

My advice – no extra charge! I don’t sense that consumers of rhino horn are particularly concerned about conservation or animal cruelty. Success will come from positioning synthetic products as more potent. Is it ethical to pitch a product’s unproven benefits? No, but in this case, it seems so much better than the alternative . . .

Sensoria

Opportunity: “Get an extensive set of data from every run. The mobile app monitors your foot landing, contact time on the ground and cadence, and tracks other familiar parameters. Connect the app with heart rate monitors (HRMs) that communicates through Bluetooth Smart to also monitor your heart rate. Get detailed visualization of your activities right on the smartphone after your run,” Sensoria’s website tells me.

OK – I get it. Sensoria is for fitness enthusiasts and others who like their personal data big.

Audacious Sales Challenges: Convincing customers to trade in their prosaic shorts, socks, and wicking t-shirts and go electronic. Also, persuading consumers that the rechargeable ankle bracelets, left and right socks (it’s true!), and Bluetooth sensor monitoring haven’t sucked the simple joys out of running and walking, and made these activities into a self-indulgent data-mining extravaganza.

Great quote from website: “Each sock features magnetic contact points below the cuff so you can easily connect your anklet to activate the textile sensors.” – What? Wait a minute – I just wanted to go out for a jog . . .

My advice – no extra charge! Focus the sales effort on a) people who have medical concerns where activity monitoring is essential, and b) fitness enthusiasts who love gadgets. If I were selling this product, I’d stop every person I see wearing an Apple watch and running shoes, and encourage them to try Sensoria’s products.

“You can’t overlook the lack Jack/
of any other highway to ride/
It’s got no signs or dividing lines/
and very few rules to guide.”

– Words by Robert Hunter from the song, New Speedway Boogie.

We thrive on extrapolating the future from the past, and finding well-marked pathways to revenue success. But I most admire organizations that accept the challenge of blazing new trails, even when the effort seems borderline impossible. I wish all of these companies well. Stay tuned!

Six Sales Strategy Mistakes to Avoid in 2016

All sales failures result from executing the wrong strategy, or from executing the right strategy the wrong way.

Companies typically reward success, but along the way, stuff happens. Everyone makes mistakes. Little mistakes are OK—we’ll recover. But big, fat, strategic mistakes—the kind that cost millions, or billions of dollars? No thanks. I’d rather not repeat an error.

For those whose 2016 selling strategies are still percolating, here are some mistakes to avoid:

1. Focus on best practices while waiting to see what the market’s going to do. Remember the proprietary advantages that made you successful in 2015? They will be leapfrogged. While you’re busy best-practicing, your competitors are creating nifty proprietary advantages, and they will use the best ones at every opportunity to win new sales, and keep you off balance.

2. Inhibit organizational learning. I don’t like to hear salespeople whine any more than you do, but a bring-me-solutions-not-problems culture will cause any sales strategy to fail.  Ask salespeople what customers are saying, and what’s working strategy-wise—and what’s not. They’ll tell you. Listen, and take notes. Then share the knowledge.

3. Reward your sales force for producing revenue—but nothing else. A compensation plan based on revenue achievement alone will create unintended results—some of which could undermine customer loyalty. The sales force provides more value to a company than just revenue production – solid customer relationships and competitive intelligence are among them. Whatever you expect and value from your sales force, make sure it’s recognized and rewarded.

4. Accept assumptions without questioning them first. Assumptions are a component of any strategy, but don’t overlook your greatest revenue risks. Ask “which assumptions, if false, will prevent our organization from achieving our strategic goals?” If the worst scenario is also the most likely, consider a new strategy.

5. Disregard your trade-offs. Profit margin versus revenue growth. Proprietary versus open-source. Every strategy requires trading off other ones. Trade-offs are nascent competitive weaknesses. Ask “how will competitors or newcomers to our market exploit the path we didn’t choose?”

6. Design your sales process with your organization at the center. Put your company at the center of your sales process, and nobody will beat a path to your door. Even the most thoughtfully-designed sales process will under-achieve if it doesn’t connect to a buying effort.

Executing the right sales strategy the right way requires accepting the right risks and avoiding others. Mistakes are inevitable. At the end of 2016, you’ll know you’ve been successful if you can say “the mistakes we made were worth it.”

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