Tag Archives: Sales

Is it Better to Grow by Building Existing or Adding New Functional Teams? Three Approaches

Situation: Sales at a small company have grown rapidly. They need to expand staff to keep up with demand and fulfillment. There are two options: expanding current functional teams in sales and service or adding a back office operations function. Based on your experience, which of these two options makes more sense for a company of fewer than 20 people?

Advice from the CEOs:

  • Since the company is planning to grow from 10 to 20 people, create an organizational chart for what the company will look like with 20 people. From this back into what it looks like with 15, and then 10 people.
    • Look at how the positions work, and what talents you want to see in each position. Assess how well your current staff fills both current and anticipated talent needs.
  • The company’s key market differentiation is and will continue to be exceptional client service. Here are some of the questions to ask:
    • Are the back office needs of the sales and service teams similar or different?
    • If there is enough overlap, can one person, and eventually a team, supply the operational needs of both your client services and sales functions?
    • If there is little overlap, what specific needs are currently unfulfilled by each team? Is there enough work to justify adding more than one person so that each team manages their own operations?
  • One option is a matrix organizational structure which can work well in a firm of 10 to 20 people. Key factors include:
    • Establishing a company culture to compliment your strategy and objectives.
    • Establishing clear expectations of accountability and expectations to govern the model.
    • Matrix structures don’t always succeed. Ask whether your current people and culture are suited to a matrix organization.

Key Words: Growth, Staff, Demand, Function, Team, Sales, Customer Service, Organizational Chart, Talent, Matrix, Culture, Objectives, Accountability, People Skills

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How Do You Find and Focus on Your Promoters? Five Factors

Interview with Richard Owen, CEO, Satmetrix Systems

Situation: If you are not creating promoters of your product or service, you are inhibiting your own growth. Growth is challenging and if you don’t have positive word of mouth it becomes more expensive. How do you find and focus on your promoters?

Advice from Richard Owen:

  • Calculate and understand your “Net Promoter Score” – the percentage difference between “promoters” and detractors.” Promoters are those customers who would highly recommend your business, detractors have a negative perspective.
  • It is important to attend these two audiences – “detractors”, who create negative word of mouth, and “promoters” who create positive word of mouth. Detractors can be targeted for service recovery. At the same time, you must identify your promoters and find ways to get them to actively let others know about your business. Both negative and positive effects are being amplified today by social networks.
  • Understand what your business does that creates detractors and promoters. Gather and analyze root cause data to provide insights around the actions you and your team should take to change the balance in your favor.
  • Hold employees accountable by “stack ranking” the customer performance of each of your teams or employees. In part, this helps you to understand areas of strength and weakness and allows you to create individualized or group action and coaching plans. There is also a tendency for groups below the average to improve performance because they are being measured.
  • These are simple ideas, but making this work in practice can be a challenge. Setting up an effective system takes more leadership than leaders typically realize and is often counter to the short term realities of most companies. Success requires a long-term perspective and an external versus internal focus. And, of course, the right systems!
  • While the leadership of many mid-market companies are as sophisticated as that in large companies, mid-market companies lack the resources of large companies. A focus on action around promoters and detractors allows a company to get 90% of the value for 10% of the effort in customer experience management.

You can contact Richard Owen at [email protected]

Key Words:  Promoter, Growth, Word of Mouth, Positive, Negative, Cost, Data, Customer, Metric, Coach, SMB, Perspective, Effectiveness, Resources

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

Situation: The Company downsized during the recession. 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?

Advice from the CEOs:

  • Look at what hats you are wearing. Wear the hats that fit best and take off the others.
    • If an activity is not core to your success, off-load it. For example: 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 2 years? On what roles do you want to focus? Build a plan to transition you 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 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.

Key Words: Business Development, Core Business, Sales, Service, Outsource, Role, Office Manager, Intern  [like]

Working with an Off-Shore Business Partner – Six Recommendations

Situation:  The Company has an off-shore business partner. Primary concerns involve team performance, process documentation and anticipating sales/marketing problems before they become issues. What have you found effective to monitor these areas?

Advice from the CEOs:

  • At the executive level, keep things simple – identifying the major goals and pieces of projects that are the make-break points.
  • Simplify the high level summary and make sure that all of the supporting activity is aligned with and supports key project or company goals. Some members manage projects with 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 is different from development projects. Drive monitoring off forecasts, pipeline, and achievement of metrics that track with the forecasts.
  • In working with your off-shore partner, organize your presentations so that the key points of emphasis are readily visible. Have back-up slides to show detail 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.

Key Words: International, Partner, Performance, Process Documentation, Sales, Marketing, Alignment, Project Management, Communications                 [like]

How do we Get our Doer/Sellers to Sell? Four Recommendations

Situation: The 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?

Advice from the CEOs:

  • Experience turning around a consulting organization with no sales culture:
    • Ours was a 5-year process. It starts with a leader who sells successfully and teaches by example.
    • As we made the transition, we selected new hires for sales skills to compliment their consulting skills. This facilitated our transition to a strong sales culture.
  • You need to commit to build a sales culture.
    • Moving to an account manager team versus an engineering/professional team was a big shift. It takes time and patience.
    • Hire effective sales people to jump-start the process. Most of the successful seller/doers will be new hires.
    • Revise your reward and recognition structure around your objectives.
    • Make rainmakers your best paid people. This will bring others out of the woodwork.
  • Bias 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. Directors will now have more incentive to hit their sales numbers.
  • This is a difficult change in both sales leadership and culture. You may have to make significant leadership changes.

Key Words: Sales, Compensation, Core Values, Consulting, Goals, Reward, Incentive, Transition, Hiring, Culture  [like]

Where Can I Find a Good Salesperson? Five Suggestions

Situation: The Company wants to expand its sales force by adding “diamonds in the rough” – hungry individuals motivated by a high commission/low salary opportunity with high total compensation potential. How can they find these individuals?

Advice from the CEOs:

  • Hire “out of school” and use a good sales assessment tool to evaluate which candidates have the right attitude and skill set to succeed. Create a career path through a lower paid inside sales position to eventual higher paid outside sales position while the individual gets up to speed understanding your technology and as they develop sales skills. This helps to generate revenue to cover costs while developing new sales candidates.
  • Accept that you will likely experience turnover hiring candidates out of school. High commission sales forces in other industries deal with 85% turnover over 3 years to find “keepers.” This may be a significantly higher level of turn-over than you are used to in other positions.
  • Look to sales job fairs and Craig’s List for candidates.
  • Give your current sales people a bonus for referring friends or acquaintances who will stay with you for 6 or 12 months. Pay out theses bonuses over times.
  • Find a good sales recruiter to find experienced high-producers in industries with a similar product sale.
    • The appeal to these individuals is a high earnings opportunity combined with the chance to sell a sexy product.
    • Because these people will already be high earners, you may have to create a draw system so that they do not have to make too great an earnings sacrifice by switching to your Company.

Key Words: Sales, Hiring, Training, Commissions, Referrals, Bonuses  [like]

We Want to be Different – Not a Commodity! Five Important Steps

Situation:  The Company has had success with a few large clients but wants to expand their customer base for long-term growth. How do they differentiate their products in what is perceived as a commodity market?

Advice of the CEOs:

  • One company created differentiation by getting to know everyone in the business – building long term relationships, based on reputation and trust.
    • They spent time up front understanding the needs of customers that they wanted to develop.
    • As opportunities arose, they built relationships and asked questions to clearly define client needs.
    • While it takes time and patience, the objective is to be able to say “We know your business” – with credibility.
  • The steps:
    • Study the business, sector, and customers that you wish to serve.
    • Leverage the success that you have had with large customers. Talk about how you helped subunits within your large customers. This makes a big customer seem more like a collection of small customers similar to your prospects and makes your experience relevant.
    • Let prospective customers know, when appropriate to the situation, that you are hungry and will go the extra mile for their business. Simply out-serve your competition.
    • Learn who currently serves your prospective clientele. Study these competitors, their strengths and weaknesses. Talk to their customers – learn what they love about competitors’ service, and what they would like to see changed. Find the holes in what they provide and fill these holes with a better offer.
    • Look for and encourage repeat business and references to new business.

Key Words: Commodity, Differentiation, Sales, Marketing, Business Development, Customer Needs, Competition [like]

How do You Pay Sales Reps? Two Examples

Situation: The Company is considering two options to pay sales people – base/draw plus commission, or no base/draw and larger commission. What do other CEOs find most successful?

Advice from the CEOs:

  • Align your sales incentive plans to your company objectives. Two examples, one of an aligned system and one of a dysfunctional system:
    • Aligned System
      • Sales reps are 100% commission (including expenses) with no caps on income. They are measured by two sets of metrics.
      • To keep their jobs, they have to achieve a minimum of 85% of their revenue goal. Fall below this and out the door.
      • However, commissions are calculated on the gross profit achieved on sales, and reps are provided with software to calculate GP and commission.
      • This company is the most successful in its market.
    • Dysfunctional System
      • Sales reps are paid a base plus quarterly commissions calculated on achievement of revenue goals.
      • The net result was that reps had no incentive to preserve gross margins.
      • The result was constant conflict between sales and finance; the situation only started to improve as reps’ commissions were converted to a combination of revenue and margin.
  • Issue: what is the role of the rep within the sale?
    • Is the rep a door opener or a closer?
    • What percentage of the close is attributable to the rep?
    • In a complex or staged sale, allocate commissions based on contribution to the close. Reps who can’t close are not as valuable as those who can.

Key Words: Sales, Commissions, Commission Plans, Objectives, Alignment  [like]

Working On vs. In the Business – Six Thoughts for your Staff

Situation:  The Company created five customer-centered divisions headed by Business Development Managers (BDMs) who oversee project management as well as business development in their markets. A year after implementation, the BDMs are more focused on managing their teams than on developing new business. How can we enhance focus on business development?

Advice from the CEOs:

  • Your BDMs are technicians; business development (BD) isn’t their strength.
    • People gravitate toward important/urgent activities in their comfort zone.
  • Supplement your staff with people who have a proven talent for business development.
    • You may not need 5 people – 2 or 3 may be sufficient to support the BDMs.
  • What if our customers demand technical expertise in business development personnel?
    • Make category expertise a requirement when hiring, in addition to experience in BD.
    • There are specific traits that characterize successful BD personnel. Specify these traits in your hiring process and verify these abilities in candidates both by testing for these traits and through reference checks. The Sandler Organization has good tests for BD talent.
  • The BDMs are responsible for coordinating bidding and pricing. Should this responsibility be handed over to the new BD personnel?
    • Not completely. You have two options.
  • Require BD personnel to coordinate with the BDMs when it comes to pricing and project delivery, and/or
  • If you determine that the BD personnel need to be able to negotiate pricing on their own, tie their commission compensation 100% to margin on projects bid.

Key Words: Sales, Business Development, Customer-Centered Organization, Hiring Requirements, Hiring Selection, Collaborative Sales, Compensation  [like]

How Much Rope Do I Give the New Sales Guy to Hang Himself? Four Pieces of Advice

Situation:  We hired a new sales person 3 months ago. To date, the sales person has signed some good customers, but only generated $5K in sales. How patient should the CEO be with this person, how much time should be allowed to demonstrate performance, and what metrics do other Forum members use to assess or incentivize sales performance?

Advice from the CEOs:

  • Set 90 day targets that you expect for the individual to reach:
    • X new accounts.
    • Y in sales revenue.
    • Other measures as appropriate to your business.
    • Set these targets WITH the individual, not FOR them so that the individual has ownership of the targets.
    • Monitor frequently. If the trend is below the target, ask what the individual plans to do to meet or exceed the target.
    • Targets are best set at the time of hiring. If the individual cannot approach these numbers, then cut sooner rather than later.
  • How do you differentiate the sales person from the sales talker?
    • Based on results. Expect to see results quickly.
  • The traits that correlate with success are not traits that reps develop after they are hired. They have to have these from the beginning. Your hiring process must select for these traits.
  • There are a number of companies offering tools that will help you to identify whether candidates for a sales position possess the traits that you deem most important. Among these is TTI – Target Training International – www.ttidisc.net and Sandler Sales – www.sandler.com.

Key Words: Sales, Management, Performance, Assessment, Objectives  [like]