Tag Archives: sales_strategy

Who Wants a Sales Hot Potato? Anyone?

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.

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.”

Woulda, Coulda, Shoulda! How to Prevent Your Sales Strategy from Becomming a Disaster

Originally published 6/21/10

Oil slicks, mine explosions, lost sales opportunities . . .

Risks? What risks? Woulda, coulda, shoulda! By now we know that engineering shortcuts and bad assumptions come home, biting executives in the backside. Serves them right! Apologies fly. If only the sickening results were confined to the perpetrators. But they never are. Ask a BP shareholder, coal miner spouse, or anyone whose business depends on the unperturbed ecology of the ocean. And images of oil-soaked waterfowl further remind us that risks aren’t only manifest in financial statements.

Thanks lately to BP, risky business practices have bubbled to the top of discussions. That’s healthy for sales executives, because selling strategy is all about risk—and how to manage it. But like BP executives, many sales executives aren’t ready to face it. Who wants to be branded a naysayer? “We want to know how we are going to make our revenue target—not how we’re going to miss it!” An optimistic demand that ignores one of the few certainties in sales: not every prospect becomes a customer.

In February, 2010, Outside Technologies, Inc. conducted the 2010 Sales Risk Survey in partnership with CustomerThink. Over 100 salespeople and executives responded. How they’re coping with risk might reflect how a broader group of vendors see the road ahead:

• Greater uncertainty has a direct financial cost. Compared to last year, sales pipelines and sales cycle times are increasing. Fifty-two percent said that sales pipelines increased relative to last year, ballooning to an average of three times revenue target. Only 23% said their sales cycle times were trending shorter.

• The poor economy is perceived as the greatest risk, with approximately 25% of respondents identifying it as #1, and almost half placing it among the top three risks. “Challenges from competitive forces and new offerings,” “inability to establish relationships with decision makers” and “major changes in buyer preferences and needs” also made the top three, with the latter two tied for third.

• The risk of “no decision” remains formidable. Forty-four percent named “prospect delayed purchase indefinitely or did not make a decision” as the top reason for lost sales opportunities, followed by “price was high relative to competitors” (38%), and “competitor did a better job in marketing and sales” (35%).

• Erosion of “sales control” brings new risks. While the majority of respondents (70%) agreed with the statement “when we lose sales opportunities, we know the reasons why,” a surprising 53% indicated that their companies have less influence over purchasing decisions than ever before.

• Even though risks are known, many aren’t managed. Over 63% of respondents agreed “we know the greatest selling risks we face today,” but 43% felt that unexpected situations played a role in lost sales opportunities.

• Most are not preoccupied with having cutting-edge products or services in the sales bag. Less than 20% agreed with the statement “our customers only buy products with the latest features or technology.”

• We might not like what’s happening in Washington, but it won’t impact sales strategies. Less than one third agreed that pending legislation could substantially change their marketing and sales tactics.

• Companies cannot afford to lose their top sales producers. Retention of top sales talent was identified as a vulnerability by over 45%, while almost 25% felt their salespeople “lack the basic skills to compete in our markets.”

• Social media plays a role in communications risk. While nearly 60% felt their salespeople were skilled at communicating key value propositions, a whopping 57% percent disagreed that their companies were “effective at using social media for communicating with our prospects and customers.”

• Supporting technologies are not as vital as sales automation vendors would like us to believe. Nearly 72% were neutral or agreed with “if we were suddenly unable to use our sales/CRM applications, it would not adversely impact our sales operations.”

By nature, salespeople are optimists. But the collective observations of the sales executives who took this survey reflect a nuanced view of how people view the economic road ahead. We can infer emerging strategies and tactics based on the opportunities people see and the risks they want to avoid. In upcoming posts, I’ll share the external forces that contribute to selling risks, the greatest risks that executives see over the next 12 months, and how sales organizations are coping with them.

Further reading: Sales Risk Survey Executive Summary (free to CustomerThink registered members)

Can I Sell You a Side Order of Righteousness?

Some people are thrilled by taking extraordinary risks, but most of us prefer less risk.

Strangely, some executives have flipped that idea around by piling on more risk to ones they already have. Economic uncertainty, rabid competition, and now, “My prospective customers might not like my personal politics or social biases.” Bring ‘em on!

I can’t explain this phenomenon, other than perhaps public controversy brings the same invigorating jolt of adrenaline as bungee jumping or riding a motorcycle through quarter-mile long hoops of fire. Regardless, some business leaders have political, religious, or social cards to play, and they expect others to join them. Sure, everyone has a passionate opinion about something, but is it right or fair to embed such beliefs into a business plan? Don’t their investors, creditors, suppliers, employees and customers have financial skin in the game?

Move to the left, or move to the right. Anyone for joining the enigmatic center? Ben & Jerry’s ice cream proudly supported the Occupy Wall Street Movement, and formulated a new flavor, Apple-y Ever After, to market in the UK in support of gay marriage. Even the beloved Muppets have been accused of having a social axe to grind.

On the other side, Chick-fil-a’s CEO Dan Cathy made news last month for his statements against the same marriage rights that Ben & Jerry’s ardently supports. “. . . as an organization we can operate on biblical principles. So that is what we claim to be. [We are] based on biblical principles, asking God and pleading with God to give us wisdom on decisions we make about people and the programs and partnerships we have. And He has blessed us,” he told The Baptist Press in an article, Guilty as Charged, Cathy says of Chick-fil-A’s stand on biblical & family values.

When Mr. Cathy finishes his dinner, it’s doubtful that he puts on a pair of Birkenstocks and heads to his local Ben & Jerry’s in Atlanta for an ice cream dessert. What happened to Peter Drucker’s succinct distillation that “the primary purpose of a business is to have a customer”? For certain consumers, the conflation of business and political or religious beliefs makes buying experiences decidedly cruddy. “I don’t know what to do about it. I mean, I guess I can go through the drive-through where no one will see me,” The Washington Post quoted one woman as saying. Can’t we just simply like chicken or ice cream, and leave it at that?

In my home state of Virginia, a start up bakery, Crumb and Get It, made news this month for refusing to host the Biden entourage during a campaign stop in Danville. The reason? Opposition to President Obama’s economic policies. But another local business, the River City Grill, gladly snapped up the opportunity to host the Veep along with the media. No misgivings. “If you want to throw some Libertarians in there, too, they can feel free to stop in as well,” the owner said. One man gathers what another man spills. Money is still green, no matter whether the person spending it is red or blue. Ask any hotelier in Tampa or Charlotte.

“We’ve got the Papa John’s pizza guys weighing in on the health-care debate, while the burger slingers out West at In-N-Out can’t serve up a cheeseburger without a Bible verse,” Petula Dvorak wrote in a column, Now Featuring filet o’ fracas (The Washington Post, August 15, 2012), “Somehow, it is funny that a place where a single slice of The Meats pizza can run you 400 calories, 19 grams of fat and 1,100 milligrams of sodium decides to weigh in on the health-care debate. Sort of like the Medellin drug cartel taking a stand on border patrol.”

Too absurd. People notice things. Should Enterprise Risk Managers add hypocrisy risk to their portfolios? This is where we might be heading, though that risk pales in comparison to Customer Alienation Risk. Which is why Jon, a former sales colleague, once told me, “Andy, if my prospects have six toes and green skin, then heck! I’m going to ask to join their club!” Well said, and a healthy outlook if you’ve got a quarterly number to make.

An article in The Economist, Speak Low if You Speak God (August 4, 2012), displays a photo of protestors in front of a Chick-fil-a outlet. One holds a sign reading “Stop waffling, support equality.” Most corporate marketers would agree that their vision for raving crowds doesn’t include this image. The magazine shares four tips for avoiding Customer Alienation Risk:

1) “Don’t discuss religion in public. Few people will buy your margarine just because you are Zoroastrian. Plenty may shun it if you loudly espouse dogma they find disagreeable. This tip applies doubly to global firms, which must serve customers of every faith and none.

2) If you must discuss religion in public, keep it bland and woolly.

3) Remember that something which seems trivial to you may be weighty to others.

4) Ride out brouhahas over which you have no control.”

I’ll add my own:

5) Remember, a customer who wants to spend money for your product or service—and who has the money to spend—should always feel completely happy doing so, and should never be made to feel differently.

Revenue Risk: Why Managing It Beats Crushing It

In 2011, the New England Patriots offered Aaron Hernandez, a promising young tight end who played just two seasons, a contract extension worth $40 million.

Hernandez was arrested on a murder charge two years later, in June, 2013. His employer released him the same day. The Patriots, “a team long considered a model of fiscal prudence and solid character, were the unlikely conduit for one of the most ill-advised contract offers in NFL history,” The Wall Street Journal reported (How the Patriots Lost Their Way, July 12, 2013).

“Interviews with NFL executives, agents and former players suggest the Hernandez contract was the result of a decision the Patriots made to embrace more risk . . . they also suggest the NFL’s current economic climate played a role in encouraging that decision, and that all teams may be more inclined to make serious commitments to a riskier pool of players.”

Whether you’re selling sports entertainment, IT services, or industrial pumps, risks swirl around like poltergeists. In business development, we give a tacit nod to their presence when we talk about funnels, pipelines, and forecasts. But as we know from the Patriots, executives who ignore risks or downplay their significance often pay a large penalty. The dangers are especially acute when marketers assign attributes like surefire and guaranteed to business development strategies and tactics. If only such claims were true.

Mostly, risks are misunderstood. If you set aside the negative connotations for a moment, risk simply means uncertainty toward reaching a goal. Not every prospect will buy from us – a hard fact we must deal with, or find another job. Dictator, maybe. Or warlord. Though lately, even these occupations face a risk or two.

The right question isn’t “how do we avoid risks?” but “how should we manage them?” And that requires identifying them, then assessing their likelihood and impact. Regarding Hernandez, had the Patriots performed even a perfunctory analysis, his coaches would have discovered before he first signed that a scouting report gave him a one out of a possible ten in “social maturity,” and it stated that “he enjoys living on the edge of acceptable behavior.” I can hear the discussion in the Patriots front office now. “Downside? There isn’t one!”

Schadenfreude, for those of us who aren’t Patriots fans. But I can’t get smug. After all, I live in Washington DC, home to a football team whose name is so reviled, I won’t even use it. And their record . . . well, let’s just move on.

Risks can smack anyone in the head, even when you’re aware of them. For business developers, here are some different strategies for coping with risk:

  • Add risk. New market development, new product launches, expansion of market boundaries. All of these diminish some risk, but introduce plenty of new risk at the same time. As Bob Thompson wrote on CustomerThink, “Unfortunately, many companies look at risk as something to be avoided. Which means they limit future opportunities as well.”
  • Accept risk. Not every prospective customer will buy. It’s surprising how few companies adequately plan for this ubiquitous risk. But it’s table stakes for any company that intends to compete in a market.
  • Reduce risk. Shorten sales cycles! Increase lead flow! Improve selling skills! Make the right sales hiring decisions! Monitor, measure and reward! There are many ways to reduce selling risks—or at least to create the perception they are being reduced.
  • Eliminate risk. Some business risks, such as ethical impropriety or felonious behavior, can be so catastrophic that they must be eliminated.
  • Transfer risk. Outsourced IT development. Outsourced sales. Consignment retailing. Third-party receivables collection. Many companies have been created for the purpose of absorbing risks others don’t want or can’t handle.
  • Share risk. The idea that sustains product co-development between supply chain partners, and channel sales strategies.

Which risk management strategies are best for your sales organization? Likely, a combination of these. The ones you use depend in part on your company’s capacity to carry risk, or RBC (Risk Bearing Capacity)—a strategic differentiator that can’t be seen, felt, or touched. The reason that some companies can develop technologies to launch commercial rockets, engineer driverless cars, and compete for long-term government contracts, when others can’t.

While RBC is calculated in different ways, the common basis for the calculation is “how much risk the organization can bear before [it becomes] insolvent,” according to Carol Fox, the director of the strategic and enterprise risk practice at the Risk Management Society. Most companies don’t want to test that limit, preferring to keep it theoretical.

Whether the NFL can control the increasingly risky environment in which their teams operate has been the subject of much debate. But the Aaron Hernandez saga painfully demonstrates what happens when risks aren’t well understood and aren’t properly managed.

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