Situation: A CEO’s company has built an admirable suite of products. The next step in company growth is to create a more structured marketing pipeline. They have experienced salespeople, but these people have come to the end of their rolodexes. A new approach is needed. How do you boost your sales and marketing?
Advice from the CEOs:
Create a profile of the ideal customer. This is the customer who can create the greatest leverage using the company’s suite of product. Aim for the top management of this customer.
Incentivize the sales reps to target high value accounts. To create targeting incentives, graduate the commission base.
Set initial commission based on the size of the customer.
Differentiate commission by product – pay the highest commission for highest gross profit products or the company’s highest priority products.
Salespeople need to be able to close sales by themselves.
Currently, salespeople are acting as lead generators and are counting on the CEO to close the sale.
Create a different set of expectations, including thresholds to limit the CEO’s direct involvement in the sales process – for example, limit CEO involvement to accounts with a revenue value over $500K.
Train the salespeople to communicate the value proposition for initial conversations as they qualify a new client. Create a set of resources to assist them along the way.
Is it a good idea to pay ongoing commissions forever?
Another CEO used to do this but has moved to X% for the first period/project and X/2% on follow-on-periods/projects. This keeps them hungry for new customers who will pay the higher commissions.
Don’t create a perpetual annuity – the way insurance brokers are paid. Reduce commissions on existing accounts so that they decline over time – keep salespeople focused on bringing in new accounts to maintain their income levels.
Decide on an acceptable level of total compensation for salespeople. Plan the commission structure to allow them to reach this level, but they have to keep selling to maintain this level. Keep them hungry.
Situation: The CEO of a small but profitable company has a promising employee who she wants to promote to a supervisor role. The challenge is that this employee has limited English. Promoting this individual may upset the current supervisor. Do you promote an employee with limited English?
Advice from the CEOs:
Before making any decisions consider taking the “lead” position in manufacturing short-term instead of promoting or hiring a supervisor.
This will allow you to fully understand the manufacturing operations, as well as any points of art in the operation that can serve as the company’s foundation IP.
To think about the role of supervisor or Plant Manager, visit a Starbuck’s for an hour and watch the Starbucks Manager. This individual will, over the course of the hour, perform all functions within the establishment. This is a good model for a hands-on supervisor for a small operation.
Given the small size of the current operation, look for a more modest role for the position. Instead of Operations Manager perhaps Plant Manager. This will allow the individual time to grow into a larger role as the company grows.
How should the message be delivered to the promising employee with limited English as well as to the current supervisor?
Tell the employee “We like you and think that you have real potential. Would you be interested in an English as a second language course to build your English skills? We’ll pay for the course.” It is important to be enthusiastic and positive with the individual as you have this conversation.
A supplemental alternative is to reimburse the individual’s use of one of the online programs like Babbel or Duolingo that enables learning or improvement of language skills using a mobile phone. These programs are inexpensive and highly effective with diligent practice.
Promoting this individual above the current supervisor may generate a problem. This doesn’t prevent the promotion. Just assure that it is done carefully and be prepared for the current supervisor’s reaction.
When it is timely, instead of promoting this individual immediately, consider offering a temporary lead role for key tasks of increasing levels of responsibility. This will allow time for the individual to prove their merit and capabilities to others over 2-3 months.
Situation: A CEO wants the sales and marketing ream to generate higher quality leads. The company already uses referrals and networking. The CEO wants to know how other companies qualify leads before passing them on to sales. How do you generate high quality leads?
Advice from the CEOs:
The first step in a good lead generation campaign is to have a clear idea of who your customers and prospects are. Who are the current customers? How do you categorize them? Can you divide them into distinct groups?
Once you have divided your customers into distinct groups, develop a detailed profile for each group, concentrating on the most promising groups first. The profile will include demographics, potential purchase value, buying behavior, social media usage and preferred social media channels. Envision each group. Create a picture that represents the buyer and their personality profile. This is an important exercise because it shifts your focus from customers as lists to customers as people, and will boost the effectiveness of both your marketing and sales efforts.
After you develop customer profiles, rank them in terms of revenue potential to the company. Pre-qualify the high end buyer, not the low end. Target the decision-makers who can make a significant purchase.
Within each profile group, establish your own criteria for a good customer. Create questions which will help you to identify this customer.
Through social media and email campaigns, develop brief questionnaires and simple contests to help you to identify potential customers based on the criteria which you have developed. Develop a more detailed questionnaire turn leads into prospects.
Once a lead responds to your social media or email outreach have a sales person go through the detailed questionnaire with the lead prior to scheduling or going out on a face-to-face call.
You want to have well-qualified people making these calls.
Interview with Mari Anne Vanella, CEO, The Vanella Group
Situation: High tech companies need a more effective, higher level approach to prospect accounts. This means capturing sales intelligence more meaningfully, and aligning marketing approaches with customer needs based on prospects’ experience. Traditional transactional lead generation methods must be replaced by a deeper methodology that enables salespeople to speak to the personality of the business buyer. If all of this is true, how do you revamp your lead generation process?
Advice from Mari Anne Vanella:
Executives are so busy that their schedules are overloaded. If you want to reach them, you must engage them at a meaningful, more situationally fluent level.
Executives aren’t disinterested in new vendors and opportunities to gain efficiency or save money; they’re just hard to reach. Therefore, it is critical to develop sufficient knowledge prior to initial contact so that you can quickly engage the prospect, and equally quickly re-engage them on follow-up calls as they progress through your sales pipeline.
Companies must mature beyond volume-based marketing and sales. The traditional model calls for up to three or so telemarketing center contact attempts to a large number of leads.
Current research indicates that 80% of leads are matured into prospects after 5 or more contact attempts. More effective approaches call for 7 to 10+ contact attempts to reach busy executives and managers. This requires greater skill and persistence than the traditional approach.
Re-engineer the process through which you contact leads and follow-up on prospects. Most deals fall out of the pipeline through mismanagement.
The focus of sales and marketing transformation should be on new metrics to boost success rates, as well as communication skills and pipeline management.
It is critical to understand the individual buyer’s purchase process. Sales close at varying rates. This requires listening closely to the prospect’s timeline and the next steps in his or her consideration process. If you agree on a follow-up date, honor it. Attend to the smallest details.
A lost deal calls for a deeper de-brief than a simple note of “sale lost” or “lack of prospect interest.” Marketing needs to understand why deals don’t happen to optimize processes.
The implication of these observations is broad. Most sales and marketing teams are held strictly to results, expressed as numbers that can be taken to management and the Board. This serves a function, but if it dominates sales and marketing processes it may undermine results. Understanding the realities facing prospects calls for a more technical marketing organization and an empathetic customer approach based on an intense understanding of the prospect and their needs.
Situation: A company is transitioning from a time and materials to a fixed price bid model. Estimators and project leads find this transition difficult. We need them to think like business managers. How do you help managers to see and think in terms of the big picture?
Advice from the CEOs:
First, set up a framework that repositions projects in a business framework.
All projects are business go/no decisions with expenses, minimum profitability targets, and incentives provided for beating initial projections.
This will help generate more consistency in bids and final gross margins per project.
Next, teach managers and employees industry and company standards within your new model.
Do post-mortems on all projects. Did we make or lose money versus initial estimate? How much? How did we perform against estimated time and expense? Were client expectations met? Were they exceeded? What was good or bad about the project? Were there errors in the original estimates? Where could we have saved cost?
Use this information to improve your estimating process over time.
You have a long history of T&M projects. Categorize these by project type. Look at the hours required to complete the projects – both engineering and management time – as well as other costs. Establish range and averages within each category.
Look for key variables among the project categories: scope of project, learning curves, efficiency of team members.
Work through known costs and outcomes on past projects as examples to teach the process.
For new projects, calculate best, medium and worst case hours and costs. Bid based on your worst case as you develop your learning curve.
Make sure to include a project management fee on top of your T&M estimates. Eventually you want to develop an overhead percentage to cover project management.
Team your estimator with the project lead both for project input, and performance against the bid.
Evaluate and compensate both based on project outcome.
The critical measure will be gross margin generated versus gross margin estimated on the project.
Key Words: Leadership, Project, Time and Materials, Fixed Price, Bid, Framework, Consistency, Standards, Variables, Estimator, Lead, Incentive