Category Archives: Sales & Marketing

How Do You Effectively Manage Your To-Do List? Five Recommendations

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Situation: A company recently downsized. The CEO and sales staff are overburdened by administrative and business development tasks. What’s the best way to bring to add resources to support sales and infrastructure? How do you effectively manage your to-do list?

Advice from the CEOs:

  • Look at what hats you and others are wearing. Wear the hats that fit best and take off the others. If an activity is not core to company success, off-load it. For example: look at your bookkeeping, shipping and receiving, records and basic correspondence. These are necessary, but don’t generate revenue.
  • If your core businesses are sales and service, is one more profitable than the other? Can you outsource pieces of the less profitable activity short-term?
  • Where do you want to be personally in the next two years? On what roles do you want to focus? Build a plan to transition yourself into these roles. The E Myth Revisited by Michael Gerber is a quick read that outlines the process.
  • You may not need to bring in a high level operations manager. Consider hiring an office manager to help organize both you and your business development staff. For a smaller operation, this person can take care of phones, bookkeeping, shipping and receiving and routine correspondence. This will allow executive staff and sales to focus on growing and servicing customer demand.
  • During the summer months hire high school or college summer interns. They provide an inexpensive source of labor, high levels of energy and creativity, and are eager for work experience. Some of these individuals may become future employees.

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How do you Boost Value in a Commodity Market? Five Suggestions

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Situation:  As a result of the technology revolution, products in established markets have become commoditized. For example, advances in medical technology has driven down price while increasing incidence and prevalence of diabetes has driven up demand. How do you boost value in a commodity market?

Advice:

  • Taking a broader view of the market is critical. Analyze the entire customer experience, not just your segment of the market. Assess markets and industries surrounding your primary offering and look for un-served opportunities and gaps. Where you find opportunity, elevate your offering to the next level by integrating your product as component. Create a compelling advantage but avoid unnecessary adaptation of your existing product or service. Can your technology become part of a broader service offering, or even part of a personalized solution? Are there opportunities to move higher up in the value chain?
  • Begin your transformation at the first signs of commoditization. Being first brings a huge advantage.
  • Once you identify an unmet need, consider working with related industry groups to create new standards addressing these gaps. Implementing the resulting standards will give you a new competitive advantage against your competitors.
  • Find other applications for your product or service. Consider new applications for the components used in your current offering. Find new customers outside of your historic customer base. Consider alliances with other companies experienced with the new opportunities you find.
  • Within your own organization begin a process that routinely analyzes the customer experience and general needs beyond your current offering. Working with an outside consultant can help by adding a new perspective.

Thanks to Dirk Boecker for his contribution to this discussion.

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How Do You Focus Company Competency to Support Growth? Eight Thoughts

Situation: Both in the case of a start-up, and when an existing company adds a new business unit, one of the biggest challenges is supporting rapid expansion during market launch. Talent necessary during the product completion phase may not be sufficient to support this growth. How do you focus company competency to support growth?

Advice from the CEOs:

  • Bring in “been there, done that” expertise to support the current team. You want to add individuals who have experienced both success and failure in similar markets, and in both larger and similar sized companies. Hire people who can be transformational, not someone who can simply occupy a box.  Give them a chance to do more, add to their toolbox and they will in turn help the company achieve its goals.
  • A wide range of past experience with multiple employers is now seen as a benefit, whereas in the past it may have been a liability. It brings more knowledge and experience to the company.
  • Among people with highly diverse resumes, how do you tell performers from non-performers? Focus on what they did to transform their past company. Did they build alliances, make change happen or improve the organization during their incumbency? Look at how they did it.  Chances are this is a very leverageable skill. Look for doers – people who aren’t afraid to roll up their sleeves will make the biggest impact in the organization.
  • Look for people who possess “strategic humility.” Individuals who aren’t afraid of mistakes and foster an environment where the boundaries are continuously pushed. The enemy of ‘good’ is ‘perfect’. The best companies consistently make ‘good’ decisions.  If someone makes a mistake, allow them to own up to it, learn from it and move on.
  • Look for the ability to assess, develop, plan and mobilize resources to execute the plan.
  • Use LinkedIn to identify people with whom an applicant worked in previous jobs to conduct independent reference checks. People don’t provide individuals who will give them a poor reference as their references.
  • Also use LinkedIn to identify candidates for open positions.
  • By adding resources with these traits to your team, you will markedly improve the likelihood of your company’s success.

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What is the Best Way to Respond to a Request to Reduce Price? Six Thoughts

Situation: An important customer just asked for a price reduction. The company’s production and materials costs have increased and eroded their margins. What is the best way to respond to a request to reduce price?

Advice from the CEOs:

  • The first question is whether the company is selling a commodity or a unique and differentiated product? Commodities rarely command a premium above market unless it is possible to bundle with differentiated delivery. Unique or differentiated products justify a premium because the customer has only two choices: purchase at your price or try to develop an alternate source.
  • The customer may have valid reasons to request a lower price. Counter with a combination of lower price and a lower level product to retain your margins. If the sale involves service, assign less expensive resources in return for a lower price to preserve margins. Define the trade-off to the customer so that it becomes their decision, not yours.
  • Adjust terminology. Use “run rate” vs. “price”, and speak of balancing resources assigned. Avoid cheapening or commoditizing your offering to meet the customer’s price demand.
  • Don’t assume that there is any such thing as a “fair price” or “fair margin”. The price is whatever the customer is willing to pay for your offering. The price increases the more unique your product or offering is, and the more critical to the customer’s needs.
  • Do NOT share your cost and margin information – this should be company policy.
  • Consider combinations of pricing, terms and delivery that keep you whole while offering the customer different price points.

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How Do You Boost Acceptance of a New Product? Three Solutions

Situation: A company is introducing a new product that enables devices to monitor patient medical conditions via smartphone. This can improve early detection of disease and lower medical costs. However, bureaucratic inertia within major medical providers can inhibit the adoption of disruptive technologies. How do you boost acceptance of a new product?

Advice from the CEOs:

  • Take an inexpensive ultrasound device as an example – a device that can both provide the results of a breast scan for cancer and transmit the results to an individual’s physician. A device like this can be emotional for some women, and they may be reluctant to use a product not recommended by their doctor. Therefore it is critical to gain physician acceptance of the device. this can be achieve this by: publishing medical studies demonstrating the efficacy of the device, building and leveraging relationships with medical societies and groups through white papers and presentations at meetings by champions for the device, and participating in high profile events such as American Cancer Society events or the Race for the Cure.
  • Consumer awareness of the device can be built through targeted advertisements in women’s magazines and gaining the support of high profile female spokespersons who have experienced and recovered from breast cancer. This can generate radio and television talk show appearances, infomercials via TV and the Internet, Blogs and generating discussion about the device on disease-specific web sites to generate viral marketing.
  • Do not be afraid of researching non-traditional activities. For example, there is significant potential for a device like this in portions of the Muslim world, where women won’t see a male doctor and few female doctors are available. This results in breast cancer death rates three times higher than those seen in the West.

Thanks to Kenneth Purfey for his contribution to this discussion.

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How do you Research the Brutal Facts of a Business? Seven Options

Situation: A company wants to enter a new market, but does not know much about it. Jim Collins advises understanding the brutal facts of any business as an essential part of strategy. How do you research the brutal facts of a business or market?

Advice from the CEOs:

  • Determine the key players in the market, and closely observe them – their mistakes and successes. Identify and interview clients and look for gaps in products and services offered. Use this research to develop a differential advantage for your product or service.
  • Use allied resources. As an example, for a general contractor this includes real estate professionals and other allied professionals who know the marketplace and the performance and reputations of other contractors.
  • Business consulting firms conduct surveys of markets. Look for and purchase published surveys. If you participate in their surveys you can get the results at a reduced cost.
  • Trade magazines and business journals like the San Jose/Silicon Valley Business Journal publish surveys of the “Top 25” local businesses by industry. These help to assess local competition and gather information about revenues, principals, etc.
  • Leverage industry associations. Attend conventions and learn the lay of the land from the attending sales people.
  • Leverage Internet resources: Hoovers.com, Dunn & Bradstreet, HarrisInfo.com.
  • Have your best sales reps talk to customers in the new market about their needs and desires, and their current suppliers. Ask them to gather information and present to marketing and sales competitive reviews of the market based on what they learn.

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How Do You Respond to Market Uncertainty? Five Suggestions

Situation: Many industries face uncertainty due to potential changes in reimbursement and shifts in regulation. How does this impact strategy for an early stage company or the introduction of a new product? How do you respond to market uncertainty?

Advice of the CEOs:

  • First and foremost put a premium on focus, particularly in markets dominated by large incumbents. Past practice we would have blanketed the market to maximize early market share. Current practice focuses on being much more selective in terms of where to compete and putting more effort into targeting geographies.
  • This focus is accompanied by more caution and control of spending. Only hire a new sales rep, for example, if there is assurance that there is a significant customer base in the market that the new rep will serve.
  • Similarly, be more cautious in capital equipment decisions. In parallel, if an employee leaves do not automatically replace that individual unless there is market potential in the market served by that employee.
  • In terms of price planning, where in the past it was possible to count on annual price increases, plan for the potential of prices decreasing over time to reflect new pressure on reimbursement and cost containment. As another example, if there is a pending tax change on the products produced assume that this will reduce margins where in the past the additional cost might have been passed it on to the buyer. Reduced margins will also impact new product selection and investment strategy.
  • The big change in long-range planning is that many companies are focused on slow, sustainable growth – maintaining both gross and net margins and profitability. This is a major change from several years ago when the focus was on maximizing rapid market penetration for new products. Focus on being self-sufficient financially and thus avoid having to rely upon future fund-raising rounds.

Our thanks to Ken Purfey for his contribution to this article.

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How Do You Justify Differential Pricing for the Same Services? Three Approaches

Situation:  The CEO of a company struggles with differential pricing. They want to be fair to clients but realize that a one-price policy limits growth. What tiered pricing models work, and how are they rationalized? How do you justify differential pricing for the same service?

Advice from the CEOs:

  • Differential pricing by client demand. For high value services, you must have a compelling value proposition. Research comparative premium pricing for similar value propositions and set prices accordingly. For price sensitive clients offer two alternatives: senior staff services at one price or associate services under supervision for a lower price. Let the client choose between price and quality?
  • Differential pricing by market risk. Early stage clients want high service levels but may not be able to pay bills. This justifies a premium price, as you are not assured of collecting for services. The differential is a risk premium that covers non-payment risk. Well-established clients are less risky and support lower pricing due to a lower risk of non-payment and are assigned a lower risk premium.
  • Differential pricing for bundled vs. non- bundled services. If a client purchases individual services, then there is a set cost for each service. However, if a client wants to purchase a bundle of services, then it is reasonable to discount the bundle. You are not necessarily charging less for the bundle because you have now received additional business at a lower acquisition cost. Your “discount” reflects the savings that you have enjoyed in reduced marketing and sales cost.

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How Do You Work with an Off-Shore Business Partner? Six Recommendations

Situation:  A company has an off-shore business partner. Primary concerns of the CEO involve team performance, process documentation and anticipating sales/marketing problems before they become issues. What have others found effective to monitor these areas? How do you work with an off-shore business partner?

Advice from the CEOs:

  • At the executive level, keep things simple – identifying the major goals and pieces of projects that are make or break.
  • Simplify the high level summary and assure that all aspects of the supporting activity are aligned with and support key project or company goals. Some members manage projects with reviews and updates during weekly or bi-weekly meetings.
  • The benefit of keeping it simple in your own mind is that you can always return to this simplicity when dealing with detail level queries from the partner. It keeps you grounded and on track.
  • One company uses project timelines that clearly show each of the teams where they fit into the project and how important it is for them to complete their portion of the project on time and to spec. Keep everything simple and direct.
  • Sales tracking and management are different from development projects. Monitor forecasts, pipeline, and achievement of metrics that track with the forecasts.
  • In working with an off-shore partner, organize your presentations so that the key points of emphasis are readily visible. Have back-up slides to show detailed aspects of particular projects or initiatives, and be prepared to cover the details if needed. This will help to build confidence between you and your business partner.

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How Do You Get Doer/Sellers to Sell? Four Recommendations

Situation: A company has a geographical sales and service organization. Much of the sales effort comes from the consulting reputation of the managing director of each geographical unit, but he directors’ core values usually favor consulting over meeting sales plans. How do we get these directors to meet sales goals? How do you get doer/sellers to sell?

Advice from the CEOs:

  • One company shared their experience turning around a consulting organization with no sales culture. This was a 5-year process. It started with a leader who sells successfully and teaches by example. As the company made the transition, they selected new hires for sales skills to complement their consulting skills. This facilitated their transition to a strong sales culture.
  • Another CEO pointed out that you need to commit to build a sales culture. Moving to an account manager team versus an engineering/professional team is a big shift. It took time and patience. Hire effective sales people to jump-start the process. Most of the successful seller/doers will be new hires. Revise the reward and recognition structure around the new sales objectives. Make rainmakers the best paid people. This will bring others out of the woodwork.
  • A third CEO recommended biasing sales compensation for doer/sellers toward variable compensation. Allow successful individuals to make over $200K per year. Consider a 3-year phase-in by not increasing base pay through raises. More than make up the difference in available variable pay. This will give directors more incentive to hit their sales numbers
  • This is a difficult change in both sales leadership and culture. It may require significant changes in leadership within the company.

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