Originally published 12/05/08
Sales risk has always been a business hot potato. It’s more comfortable when someone else is holding it. In this economy, the risk potato has become scalding hot.
Salespeople can monitor thousands of conversations simultaneously and identify highly qualified opportunities.
As a sign of the times, one software client told me, “We’re looking for a salesperson who will work on full commission.” In other words, “We can’t afford to invest anything in case he or she doesn’t produce.” My response: “If you find that person, don’t forecast the revenue. Moving all of the risk to someone else’s shoulders won’t make your sales strategy successful.” The problem is, in an uncertain economy, few companies want to absorb any more risk, and the trembling has become palpable.
My client’s effort to avoid risk is not altogether wrong. Sane businesspeople don’t seek risk; they manage it! But eliminating risk altogether is a zero-sum game. Without risk, there’s no return. What are my client’s options?
- Disaggregate. Follow Henry Ford’s lead. One hundred years ago, he recognized that production efficiencies were enabled by specialization of tasks. Some selling tasks, such as prospecting, are so inefficient that it’s better for outside organizations to manage those processes. Many sales organizations cope by creating hybrid selling models that embed third-party prospecting and lead management resources. Can such a hybrid sales process appear seamless to customers?
Beth Schrager of Schrager and Associates, a Massachusetts-based outsourced sales provider, believes so. Her firm provides full-service outsourced sales solutions, and her record of long-term client retention corroborates her success. According to Schrager, “We bring to the table proven, tactical sales experience that enables companies to generate more revenue without increasing sales costs.”
Not every outsourced provider works the same way. Further, keeping costs flat while increasing revenue reduces financial risks but creates new ones. Past assumptions are no longer certain. The salesperson we talk to might not be an employee of the company we buy from. Some outsourced firms impart that information with a subtle semantic hint, scripting salespeople to say “I’m calling on behalf of . . . ” While some prospects might ignore the distinction, others find the disclaimer unsettling. Outsourced selling models require particular attention to how to disclose information because trust and rapport can be damaged when communications are not handled properly.
- Listen first—then shout! Many organizations begin the selling process by spending mightily on broadcasting messages to prospects. That strategy means shouting first, then waiting for prospects to communicate interest. But there’s great financial risk in that approach. Why? Because customers and prospects can block perceived noise using widely-available tools that are becoming increasingly sophisticated.
But thanks to social media and a fabulous online tool called alerts, a method has emerged that inverts the old model—lowering risk in the process. Through services such as Google Alerts, Yortify.com and Alerts.com, salespeople can monitor thousands of conversations simultaneously and identify highly qualified opportunities. My Aug. 19, 2008 CustomerThink blog post, Don’t Bother Me With Social Media, described how one company converted its dominant sales tactic from shouting to online listening. Instead of producing mass-market e-newsletters and other lead-generation campaigns, the company’s small sales staff looked for online conversations that mentioned competitors and identified a large universe of highly qualified prospects in the process. From there, a salesperson-initiated phone call began the direct communication.
- Create sales intermediaries. Sales intermediaries, such as independent channel sales partners, enable producers to share selling risks and to extend market reach. But channel sales models don’t fit every organization. Are you comfortable riding in the business-development passenger seat while someone else drives? If not, channel sales will bring you uncomfortable new risks. Selling your company’s product might be your priority, but it’s one that your channel partner might not share. On the other hand, recruiting, hiring, training, developing, managing and retaining a dedicated in-house sales force require financial resources that not every company can afford. Adopting a channel sales model offers a viable solution because the financial risks can be more easily absorbed if they are spread between multiple organizations.
Larry Bossidy and Ram Charan describe channel sales risk trade-offs this way in their book, Confronting Reality—Doing What Matters to Get Things Right (Crown Business, 2004):
Learning about end users is harder for companies that sell through intermediaries, and whose ultimate buyer may be several steps down a distribution chain. They generally don’t have mechanisms designed to capture information about the customer and end user.” But selling through intermediaries has benefits. “There may be steps that can be eliminated, cost reductions, or insights into how value is added (or subtracted) along the way. The result can be to make the entire chain not only more cost-competitive, but also more effective in delivering value.
In an uncertain economy, executives who look through a risk-reduction lens when creating sales strategies will make better decisions than those who look through a cost-reduction lens alone. Why? Because cost reduction skews decisions by failing to consider the financial impact of the concomitant risks. I’m talking about market risks, communication risks, hiring risks, sales cycle risks, ethical risks, brand-image risks—and yes, financial risks. You must fully consider each one.
What will my client do to achieve his sales objective? It’s unclear. Given the economy, there are few guideposts and many forks in the road ahead. One thing is certain: When it comes to selling, to get the right results, you must provide effort. That requires the ability to catch the risk hot potato—not just the ability to throw it.