How Do You Design an Effective Sales Model? Eight Points

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Situation: A company is in the process of building an inside sales program to complement their outside sales capabilities. What are the most important strategic components of an effective sales model? How do you design an effective sales model?

Advice:

  • In a marketing/sales system, marketing is the precursor to everything. If you can’t effectively deliver your message to your audience, you have no lead generation machine and sales must resort to cold calls. In today’s online world, two of the key components of a marketing system are email and online campaigns, combined with tools for rapid and responsive follow-up.
  • In an effective system, the inside sales team has primarily responsibility for following up on leads. This team’s role is to qualify the prospect responding to the company’s marketing outreach. Is this person the right buyer for their company? If not, who is?
  • A strong rapport between inside and outside sales is important. If this isn’t present opportunities are being lost.
  • Has the company allocated an adequate budget to fund an outreach strategy? If not, when will they?
  • The most critical aspect of the inside sales rep’s role is to be an effective filter in collecting and passing data on to the field sales force.
  • Many inside sales reps fail because their performance is measured on the number of calls made, not on the quality of the calls, information gathered, closure rates, and the value of closures. Effective incentives for inside sales are based on the quality of data gathered and on the success of field sales in closing the leads they receive from inside sales.
  • The effectiveness of outside sales comes down to choosing the right people. The 80/20 rule applies here. Typically, one out of five field sales reps hired is truly successful, one is marginal, and three don’t make it. Hire based on past experience selling to the company’s target customer groups, subjective elements aligned with company culture, and careful reference checks.
  • For the CEO, attracting and hiring good people this individual’s most important role. 

Thanks to Sanjay Sathe, President & CEO, RiseSmart.com for his contribution to this article.

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How Do You Reset Pricing When The Landscape Changes? Four Parameters

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Situation: A company sells customized products and sets pricing per product/per customer. A large client has proposed to purchase product rights across a number of products and uses. Their technology is early in its expected 5-year life span. How should the company set pricing for this customer? How to you reset pricing when the landscape changes?

Advice from the CEOs:

  • Start with a series of questions: What is the value of your technology to the customer? How much competition do you face? What other solutions are available to the customer?
  • Based on this framework, ask contacts within the customer company open-ended questions that will reveal what is important to them including: What are their licensing objectives? What is their planned use of the technology? What protections do they seek? You need to understand these before you can make decisions on pricing.
  • There are several pricing scenarios: (1) Set up a scale with a declining pricing driven by volume. (2) Would they entertain a large lump sum payment now, non-transferable if the customer is acquired by another company? (3) Would they entertain a significant annual fee to cover a preset number of uses and volumes, with small increments for additional purchases? (4) Find out what the customer is willing to pay, but you set the terms. The final arrangement will depend on the answers to these questions as well as the priorities of the customer.
  • Ask what guarantees the customer desires to protect their position. This includes: the customer’s key risk factors and whether they want exclusive or usage rights. Exclusive is worth more.

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How Do You Best Manage a Multi-generational Staff? Five Suggestions

Situation:  Employee pools are now multi-generational, with Baby Boomers, Gen X, Gen Y/Millennials and Echo-Boomers. Each group often has different expectations regarding work environments and careers. How do you connect with different generations? How do you best manage a multi-generational staff?

Advice from the CEOs:

  • People may be of different generations but they are still individuals. Ask what drives or motivates them. What they would consider an ideal reward for hard work?
  • Some companies offer a sabbatical after several years of employment – the opportunity to work on hobbies, go on an adventure or use the time as they wish. This attracts employees and encourages retention.
  • Some employees don’t seek promotion but are good contributors. They may prefer an extra week of vacation over a promotion.
  • One company gives employees budgets to spruce up their work space – allowing them some control over their work environment.
  • What are good tips on working with younger employees? Coach them to communicate thoughtfully and carefully – instead of shooting from the hip without considering impact or consequences. Bring them into the process; don’t tell them to wait. Let them start as an observer. Listen when they have questions or suggestions. Ask their opinion. Younger managers may find that they need more patience communicating expectations to older staff. Establish individualized performance metrics and enable them to monitor progress on their computers. Break down job tiers into additional levels with more achievement incentives. Allow them to reset expectations frequently.

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How Do You Respond to a Price Cut Request? Six Guidelines

Situation: One client of a company represents a majority their revenue. They have multiple contracts with this client. A new purchasing agent in that company is on a mission to reduce purchasing costs and claims that other suppliers cost less. How do you respond to a price cut request?

Advice from the CEOs:

  • Spend time with your true client – the employees and managers who have chosen your product. These people stand to gain the most from an ongoing relationship with you and may be able to reduce the pressure from purchasing.
  • Assemble testimonials and metrics from the client to show that you produce a better result at lower cost than they can get from other suppliers.
  • Simultaneously, look for opportunities to reduce your overhead so that if you must cut prices to retain the business you can afford it.
  • There are other options. Reduce the cost of resources producing the product and service. Let your client contacts know that you are being forced to do this. This may prompt them to argue that they need more senior experience from your team at the higher rate.
  • Offer lower prices in exchange for higher volume and longer term purchasing commitments. This can lock out the competition by reducing the frequency of contract renewals.
  • Remember that the job of the purchasing agent is to reduce costs. The agent who is hounding you is hounding other suppliers as well. If the PA can negotiate savings from 30% of the suppliers, it’s a big win. Get your ducks in line so that you aren’t part of that 30%.

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How Do You Rebuild Company Morale? Six Suggestions

Situation: A CEO has regular lunches with staff to foster communications and sharing of information. In recent months, few employees have been attending these lunches. Also, she has noticed a negative tone beginning to pervade the office, though the situation seems to improve when the CEO is present. How would you address this situation? How do you rebuild company morale?

Advice from the CEOs:

  • The immediate priority is to correctly diagnose the problem. Is this a question of the CEO’s energy or the team’s awareness of plans for the company? Or is there something else going on of which the CEO is unaware?
  • Meet with employees. Have open and frank discussions with them about the future of the company.
  • Meet with the most valuable employees first. Share hopes and vision for the business. Express appreciation for their contributions and discuss plans for their continued growth. Next, ask open-ended questions about the company and seek their input on how to improve it. Listen to what they have to say.
  • Next are borderline employees. Again, share the vision and appreciate their past and current contributions, but be honest about expectations for performance. Then ask the same open-ended questions that you asked the first group and listen.
  • For underperforming employees, again appreciate past and current contributions, but be clear that unless they substantially improve performance, future employment isn’t guaranteed. Ask the same open-ended questions that you asked the other groups and listen.
  • Be patient. Don’t try to develop all the answers immediately. Listen and learn what drives employees – particularly keepers. Involve them in developing programs to drive the future.

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How Do You Bring Different Teams Together? Seven Points

Situation: There are many opportunities to team with other companies, whether through partnerships, joint ventures or M&A. This is accompanied by the challenge of bringing together different teams to succeed in new roles and tasks. How do you bring different teams together?

Advice of the CEOs:

  • People are an investment. Just like the stock market is not up every day, neither will be the performance of your people. Bringing people into new relationships, roles and responsibilities takes patience, work and nurturing to build skills and to get the best out of people.
  • To optimize this, build an organizational chart of the new or revised organization that you will build. Fill in the spaces with the individual who currently holds responsibility for each role. This means that some people will have several different roles. This is OK. As you add additional people, they will fill many of these roles.
  • Build a set of company or project values to guide individuals through the decisions that will drive future growth. Involve the full team in this exercise so that ownership of the resulting chart is broad.
  • Develop and consistently express the roles and boundaries of the company or project.
  • Focus on systems and processes, not just on tasks. The core of any organization is people and relationships. These are best expressed through systems and processes, not tasks. Tasks express discrete roles. As sophisticated as these may be, they won’t encompass the richness or complexity of the systems, processes or the people involved.
  • When dealing with people always ask “What is my role?” and “What is their role?” In each situation, work to understand the other’s perspective and what opportunity or concern they are bringing to the table. Trying to transform an individual into someone that they are not doesn’t work.
  • Particularly in a company or venture that focuses on high levels of customer service, act urgently, but avoid emergencies. You want your response to customer needs to be swift, but you don’t want to destroy operational rhythm.

Thanks to Jennifer Choate for her contribution to this discussion.

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How Do You Increase the Value of Social Network Interactions? Five Thoughts

Situation: People participate in social networking sites for several reasons – to network, to promote their businesses, products or services, and to gain insight through crowd sourcing. For these audiences, how do you increase the value of social network interactions?

Advice from the CEOs:

  • Encourage participants to move from a short-term to a medium-term focus. Short term focus is about lead generation, immediate results and buy right now. Think of the man in the flashy sports coat selling his products on late night television. This may generate a sale but with low engagement and commitment. Alternatively, if you focus on engagement you start to build growth which is more sustainable. Growth which will persist with more momentum.
  • Clarify your objectives. Are you interested in sales or influence today or this quarter? How much effort do you want to put into it and what payback do you seek?
  • Be patient. Take the time to develop quality content. This time is an investment which pays back both in the medium and long-term.
  • Don’t treat people as though they can be manipulated into buying from you. There is a karmic cost to this approach. Look instead at the potential benefit that you can provide that will attract people to your content. Think in terms of reciprocity – give first and let others decide how they will respond.
  • Try an experiment. Propose a simple question: “What do you want?” Ask the question three times, each time with a different thought in mind – first annoyance, then confusion, and finally empathy. Rather than speak the questions, send them via instant message one after the other. The words of the message were exactly the same each time, “What do you want?” Without tone of voice, expression or body language, the receivers could instantly tell me what I was thinking in each case. The same works in social networking. People can read where you are coming from based on how you position your content. If you want to increase the value of what you have to say or offer, offer it openly and invite your audience to respond.

Thanks to Kenneth Vogt for his contribution to this discussion.

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What’s The Best Way to On-Board a New Manager? Four Guidelines

Situation: A CEO has identified a good candidate for a critical management role. Once this individual is hired, what are best practices for on-boarding a new member of the team? What’s the best way to on-board a new manager?

Advice from the CEOs:

  • Provide a fair salary: Review local salary surveys and pay a salary that reflects competitive realities. Consider the impression that the offer makes on the spouse. If the spouse is unhappy, there won’t be peace at home and the employee may continue looking even after accepting your offer. Consider a 90 day evaluation period. Increase chances for success by paying a fair salary from the beginning. If the individual doesn’t meet your needs, let them go.
  • Provide clear, concise direction from the start. Provide an orientation to positively introduce the manager to the others in the company. One-on-one meetings between the new manager and key employees plus anyone who will report to the manager to establish initial rapport and establish shared expectations. Consider a lunch to introduce the new manager.
  • Set SMART performance objectives: S – Specific, M – Measurable, A – Achievable; R – Realistic, T – Time-bound. Meet weekly with the new manager. Teach them what you’ve learned about the company, employees, and how things work. Avoid shifting early objectives. This is distracting and diminishes the chances of success. Sudden or frequent changes in priorities make it difficult to generate momentum – particularly for a new employee.
  • Expectations – don’t expect instantaneous results.

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How Do You Maintain Focus on Your Core While Growing? Six Considerations

Situation: A company has established a strong core business and it is time to diversity. The most promising opportunity for growth is complimentary to but a different business model from the company’s core. What are best practices for maintaining focus on the core business while developing a new opportunity? How do you maintain focus on your core while growing?

Advice:

  • Most importantly, be emotionally and strategically ready to make the bet and commit to action. In doing so you must “know thyself.” Specifically, take a long look to determine whether you tend to overanalyze or are too quick to pull the trigger. Understanding your tendencies will help in the steps below. 
  • Establish the prerequisites for pulling the trigger. This means determining:  the level of operating stability for the core business that will allow you to split focus; the level of financial stability and predictability that will support both core and expansion efforts; and the level of organizational and process stability that will allow you to take on the new opportunity.
  • Understand and define the differences between the old game and the new game. What are the financials of the growth opportunity? How do they differ from your core business? Are there conflicts that must be resolved? Can you launch an innovative solution to differentiate the new offering?
  • Gather enough understanding of market need that will satisfy you with the new opportunity so as to be able to address it effectively.
  • Establish a sound execution strategy and timeframe for launching the new business. Some of your decisions will be wrong. You need the resources to tolerate a learning curve while running fast towards your goal.
  • Draft a leadership development plan for both the core and new business before you start. This plan must define the skill sets and growth needs of each business.

Thanks to Clark Avery for his contribution to this article.

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How Do You Manage Cash Flow in a Recovery? Six Suggestions

Situation: Markets are currently down but everyone is hoping for a recovery. As business improves a company needs to manage cash flow to support growth. How do you manage cash flow in a recovery?

Advice from the CEOs:

  • This is a common challenge following a down period. Companies have reduced personnel and used up cash reserves to survive. As demand resumes it may be necessary to add resources as you increase production. It’s important not to let accounts payable get ahead of receivables.
  • Ask customers for deposits on orders – giving you up-front cash. Give priority to those who respond positively.
  • Redesign the work-flow. Add independent contractors on a project basis. This requires good cost estimates and well-defined deliverables.
  • Work with your bank and Line of Credit.  An LOC should cover 1-3 months of operation. Ask for a lot, and shop different banks for favorable lines and rates. An LOC is a short-term obligation whereas debt may be long term. Watch your debt covenants for restrictions on obligations to assure that you stay in compliance. LOCs are frequently Prime plus 1-2%.
  • If you have a broker, see what rates they will offer on a business credit line to keep your brokerage business.
  • The best alternative is to plan ahead and develop a strong relationship with your banker. This centers on a reliable credit history, so that when need arises, the banker will help you based on your past performance and the confidence that they have developed in you and your operation.

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