“I don’t care how you make your sales number, as long as you make it!”
Fifteen years ago, that was my Intermec sales manager’s guidance on how to achieve quota.
But my manager made assumptions that the sales team had the knowledge, motivation, and integrity to deliver the required results. He didn’t have the time or interest to micromanage anyone. At Intermec, many salespeople got fat, dumb, and happy under such laissez-faire management. Ultimately, sales suffered in the face of unrelenting competitive pressure, shareholder demands, and product commoditization.
Policies changed. Not only did management measure results, they began to scrutinize sales activities as well. Thousands of other sales organizations facing the same forces created measurement spotlights under which few could hide.
Today, business needs and technology have converged, causing the productivity-management pendulum to swing even further toward Total Management Control. Are purveyors and users of sales productivity software tools telling us that salespeople are too stupid to figure out how to be productive? Are their managers too lame to manage? Pete Reilly, a senior vice president at RedPrairie, developer of the Ann Taylor retail labor productivity system ATLAS (see my September 10th blog, Please Buy From Me! The New Ann Taylor Shopping Experience) said “the (ATLAS) system will allow you to push (productivity initiatives) too far, but at the end of the day, it is based on business principals and how I treat my employees. That is really up to the retailer.” His statement reveals his ambivalence. But it’s clear that financial success depends on how businesses deploy productivity tools, and no one should assume that they understand what they are doing.
The most insidious dangers aren't created by productivity rules based on flawed assumptions or incorrect information. They're created when managers detach from the gut-wrenching ethical and personal conflicts imposed on the employees who are measured and managed. Scott Knaul, director of store operations for Ann Taylor, described one misguided tactic when he was quoted in the Wall Street Journal (Retailers Reprogram Workers in Efficiency Push, September 10, 2008) saying “giving the (productivity) system a nickname, Atlas, was important because it gave a personality to the system so (employees) would hate the system and not us.”
What Mr. Knaul might be alluding to are torn emotions caused by Ann Taylor’s institutionalized sales conflicts of interest—all in the name of productivity. To mention a few possibilities: “If I’m honest with my customer, I could lose this order, and possibly my job.” “How do I spend time with my ailing parent and satisfy the minimum number of hours I must work to keep my time slot?” “As a single parent, how do I plan my weekly food purchases knowing my work schedule can be cut or changed at a moment’s notice?” These poignant struggles are frequently the other side of productivity-improvement equations, unmentioned when numbers are bandied about at the quarterly management retreat.
If laissez-faire management contributes to complacency, and overbearing rules are tantamount to wielding a stick without offering any carrot, what works? For insight, I consulted a local sales leader, Mark LaFleur, director of worldwide sales and channels for Arlington, Virginia-based software developer GroupLogic. He said “Understanding what causes sales to happen and managing metrics is critical to success, but sometimes it’s easy to get so caught up in metrics that you lose sight of the big picture . . . Effectively managing your team’s performance requires a balance between hard metrics and business instinct. I have found that there is no substitute for frequent, intensive one-on-one meetings with reps and sales managers, where you hold them accountable for understanding and articulating all aspects of their business and how they are tracking toward their revenue goals. Metrics are only one component of that discussion, and the key there is to develop practical metrics that really do lead to sales, communicate them clearly, and then hire disciplined sales people that are smart enough to understand their importance.”
When it comes to using metrics to improve sales productivity, Mark’s views are clearly nuanced compared to those of Ann Taylor’s managers. Still, it’s troubling to think about the future clash between productivity improvement, business value, and work-life balance. Managers like Mark recognize both the power and limitations of productivity measures, and that we have the opportunity today to build shareholder value without exploiting the people who help deliver the value we produce for our customers.
Wednesday, September 17, 2008
Friday, September 12, 2008
Asking to Send Literature is not Lead Qualification
Some people collect stamps, some collect coins. The salespeople I spoke to at a recent technology trade show must think I collect PowerPoint presentations and Adobe attachments. In every initial follow up phone call I received—bar none—the contact center representative offered to send me sales literature. When were they planning to ask me about my product need?
I don’t know the answer, but it’s odd that even the most basic qualification questions aren’t asked in the first call. Here’s a typical exchange:
Caller: Hi. This is Joe Jones from XYZ Technologies. I’m following up because you stopped by our booth at the FOSE Trade Show in Washington last month.
Me: Yes I did. I remember a little about your product. It’s a tool for searching databases for specific text information. I visited with a number of companies—I don’t remember much else about XYZ.
Caller: Well, we wanted to know if there’s any additional information you would like. We have some case studies we can email to you. Also, we’re holding a Web seminar next week about our just-released Optimized Search Algorithm. I can send you a link so you can sign up.
Me: I can’t think of a specific need right away, but if you want to send me an email with your company’s website information, I’ll look at your site. If there’s a specific need that matches up, I can get in touch.
Caller: Sure. I’ll include the link. Once you receive it, if you have any questions, please don’t hesitate to call me.
We sign off the call and I go on my way, and Joe goes on his. As promised, he sends his email that day. It’s still unopened in my inbox.
The lost opportunity? Even though Joe took the time to reach me, he still has no idea whether his company is valuable to me—or whether I’m valuable to his company. Is there an unwritten rule in Contact-center Land that it’s uncouth to broach the “Q-word”—am I qualified? Or, are humans simply wired to offer marketing material without expecting anything in return?
I’ve worked with more than a few companies that describe a qualified lead in broad terms. Everything from a trade show attendee who signs up for a web seminar, to a prospect with whom they have held an in-depth discussion, and whose needs they think they can fulfill. That’s a wide strike zone, and if I were on the sales force, I’d be understandably jaded every time an email message with “URGENT—New Lead” on the subject line vibrated into my Blackberry.
Why don’t companies capture qualification information early in the contact cycle? Is it because the contact center is measured on how many calls are made, how quickly they’re made, and how many “qualified” opportunities contact center reps pass to Sales? Or is it because what makes a prospect qualified is murky or poorly understood to begin with? Nicholas Carr, in his excellent book The Big Switch quotes George Dyson, a technology historian, as saying “finding an answer is easier than defining the question. It’s easier to draw something that looks like a cat, for instance, than to describe what, exactly, makes something look like a cat.”
Similarly, is it easier to slog down a pothole-filled sales road with a prospect, rather than understanding what, exactly, makes a prospect qualified? Whatever the answers, companies that don’t qualify leads early risk valuable resources on activities that are unlikely to bear fruit. Conversely, the companies that are adept at discovering a prospect “diamond in the rough” possess a huge advantage over competitors standing around the “we’ll-send-you-some-literature” starting gate. Why? They have lower sales risk and faster speed of sales execution. Better lead qualification enables a sales organization to step on the sales process accelerator.
What does qualified mean to me? Here are my top questions:
Solution fit: Does my solution provide an outcome that my prospect values?
Access: Am I able to hold a dialog with people who are influential and have the ability to decide whether to purchase my product?
Financial Resources: Does my prospect have the capability to pay me what I am likely to charge for my product or service?
Timeframe: Is my prospect motivated to purchase from me within a timeframe that matches my planning horizon?
I know. If your product or service is complex, these can be deep questions for a first-time follow-up call. The answers—if you can get them—often aren’t easy to populate into CRM system check boxes, and some believe that it still takes the judgment of an experienced salesperson to understand the qualification nuances. But even if it’s difficult to uncover definite “yes” answers to these questions, isn’t it valuable to at least uncover definite “no’s”? For example, what would it mean if you could subtract from your lead pipeline all prospects that definitely don’t need your solution?
A contact center won’t be able to uncover every risk, but unless sending marketing literature is its primary goal, the point of first contact is the best place to begin the vetting process.
I don’t know the answer, but it’s odd that even the most basic qualification questions aren’t asked in the first call. Here’s a typical exchange:
Caller: Hi. This is Joe Jones from XYZ Technologies. I’m following up because you stopped by our booth at the FOSE Trade Show in Washington last month.
Me: Yes I did. I remember a little about your product. It’s a tool for searching databases for specific text information. I visited with a number of companies—I don’t remember much else about XYZ.
Caller: Well, we wanted to know if there’s any additional information you would like. We have some case studies we can email to you. Also, we’re holding a Web seminar next week about our just-released Optimized Search Algorithm. I can send you a link so you can sign up.
Me: I can’t think of a specific need right away, but if you want to send me an email with your company’s website information, I’ll look at your site. If there’s a specific need that matches up, I can get in touch.
Caller: Sure. I’ll include the link. Once you receive it, if you have any questions, please don’t hesitate to call me.
We sign off the call and I go on my way, and Joe goes on his. As promised, he sends his email that day. It’s still unopened in my inbox.
The lost opportunity? Even though Joe took the time to reach me, he still has no idea whether his company is valuable to me—or whether I’m valuable to his company. Is there an unwritten rule in Contact-center Land that it’s uncouth to broach the “Q-word”—am I qualified? Or, are humans simply wired to offer marketing material without expecting anything in return?
I’ve worked with more than a few companies that describe a qualified lead in broad terms. Everything from a trade show attendee who signs up for a web seminar, to a prospect with whom they have held an in-depth discussion, and whose needs they think they can fulfill. That’s a wide strike zone, and if I were on the sales force, I’d be understandably jaded every time an email message with “URGENT—New Lead” on the subject line vibrated into my Blackberry.
Why don’t companies capture qualification information early in the contact cycle? Is it because the contact center is measured on how many calls are made, how quickly they’re made, and how many “qualified” opportunities contact center reps pass to Sales? Or is it because what makes a prospect qualified is murky or poorly understood to begin with? Nicholas Carr, in his excellent book The Big Switch quotes George Dyson, a technology historian, as saying “finding an answer is easier than defining the question. It’s easier to draw something that looks like a cat, for instance, than to describe what, exactly, makes something look like a cat.”
Similarly, is it easier to slog down a pothole-filled sales road with a prospect, rather than understanding what, exactly, makes a prospect qualified? Whatever the answers, companies that don’t qualify leads early risk valuable resources on activities that are unlikely to bear fruit. Conversely, the companies that are adept at discovering a prospect “diamond in the rough” possess a huge advantage over competitors standing around the “we’ll-send-you-some-literature” starting gate. Why? They have lower sales risk and faster speed of sales execution. Better lead qualification enables a sales organization to step on the sales process accelerator.
What does qualified mean to me? Here are my top questions:
Solution fit: Does my solution provide an outcome that my prospect values?
Access: Am I able to hold a dialog with people who are influential and have the ability to decide whether to purchase my product?
Financial Resources: Does my prospect have the capability to pay me what I am likely to charge for my product or service?
Timeframe: Is my prospect motivated to purchase from me within a timeframe that matches my planning horizon?
I know. If your product or service is complex, these can be deep questions for a first-time follow-up call. The answers—if you can get them—often aren’t easy to populate into CRM system check boxes, and some believe that it still takes the judgment of an experienced salesperson to understand the qualification nuances. But even if it’s difficult to uncover definite “yes” answers to these questions, isn’t it valuable to at least uncover definite “no’s”? For example, what would it mean if you could subtract from your lead pipeline all prospects that definitely don’t need your solution?
A contact center won’t be able to uncover every risk, but unless sending marketing literature is its primary goal, the point of first contact is the best place to begin the vetting process.
Thursday, September 11, 2008
PLEASE Buy From Me--The New Ann Taylor Shopping Experience
Get ready for a new low in customer experience, brought to you by Ann Taylor and their new Ann Taylor Labor Allocation System, or ATLAS.
Reported in today’s Wall Street Journal “Retailers Reprogram Workers in Efficiency Push,” the article states “because the system awards more-productive salespeople with favorable hours, it gives employees an incentive to persuade shoppers to buy things.”
Among the article’s more chilling quotes, consider this one from Scott Knaul, Ann Taylor’s Director of Store Operations: “Giving the system a nickname, Atlas, was important because it gave personality to the system, so (employees) hate the system and not us.” Enamored with the insight ATLAS has helped Ann Taylor glean, Mr. Knaul said “If we know that it takes five minutes to work with a client when they walk in the store, we won’t go over five minutes.” (Mr. Knaul, if you're reading this, please share which business thought leaders have inspired you lately.)
One Ann Taylor saleswoman shared her concerns. “The new system, Ms. Houser says, doesn’t reward her style of selling. It no longer pays to spend time developing relationships with shoppers who might not buy anything on a particular visit, she says. ‘My client (contact) book is fatter than anybody else’s in the store,’ she says. ‘Does that mean I will get a bigger raise next time? No. Not if my (average sales) numbers don’t reflect that.’”
Quoted in the article, Carl Steidtmann, Chief Economist at Deloitte, said “Because few retail workers belong to unions, it is easier for employers to ‘move people around.’” Hmmm. How do you spell "exploitation?"
I began to wonder who would enlist to work under the ATLAS culture. To help Ann Taylor find the best candidates, I formulated this brief employment questionnaire, along with the desirable responses below.
1) Oh no! Your Aunt Etta fell and she's in the hospital with a broken hip. She needs you to help her complete her Medicare forms. But it's the end of the month, and your store manager says if you miss any time, you'll risk being demoted. Which of the following BEST describes the action you would take?
a) Come in to the store and focus on making my sales number. I'll visit Aunt Etta later.
b) Visit Aunt Etta and see if I can persuade my manager not to demote me.
c) I'd have to think about it.
2) In sales, ethics
a) includes doing what is right for the customer
b) can probably be found in the dictionary somewhere
c) not sure why I would need to know this
3) You’re behind in achieving your weekly sales number. You have a customer who wants a dress and some accessories, but she only has $150 to spend. She likes a dress that’s on sale. You should
a) find out the credit limit on her Visa and steer her toward more expensive merchandise.
b) help her find a suitable combination, even if it means she spends less than $150.
c) tell her that your recommendations are motivated by making your weekly sales quota.
4) Two women enter the store at the same time. One is unkempt and has a fussy toddler in tow. The other one is by herself, holding a Nordstrom shopping bag and a Kate Spade purse. To meet your expected productivity goals, how many seconds should it take you to greet the woman holding the Nordstrom bag?
a) 1 second
b) 30 seconds
c) about a minute
d) don't know. Shouldn't she have time to browse?
5) Essay question: I'm all for offering honest information to customers, except ____________________________ . (use additional pages, if needed)
Correct answers: 1-A; 2-C; 3-A; 4-a
ATLAS is a euphemism for Employee Manipulation. Its use portends some eyebrow-raising sales behaviors. As far as productivity gains for Ann Taylor, a note of caution: be careful what you wish for, you might get it!
Reported in today’s Wall Street Journal “Retailers Reprogram Workers in Efficiency Push,” the article states “because the system awards more-productive salespeople with favorable hours, it gives employees an incentive to persuade shoppers to buy things.”
Among the article’s more chilling quotes, consider this one from Scott Knaul, Ann Taylor’s Director of Store Operations: “Giving the system a nickname, Atlas, was important because it gave personality to the system, so (employees) hate the system and not us.” Enamored with the insight ATLAS has helped Ann Taylor glean, Mr. Knaul said “If we know that it takes five minutes to work with a client when they walk in the store, we won’t go over five minutes.” (Mr. Knaul, if you're reading this, please share which business thought leaders have inspired you lately.)
One Ann Taylor saleswoman shared her concerns. “The new system, Ms. Houser says, doesn’t reward her style of selling. It no longer pays to spend time developing relationships with shoppers who might not buy anything on a particular visit, she says. ‘My client (contact) book is fatter than anybody else’s in the store,’ she says. ‘Does that mean I will get a bigger raise next time? No. Not if my (average sales) numbers don’t reflect that.’”
Quoted in the article, Carl Steidtmann, Chief Economist at Deloitte, said “Because few retail workers belong to unions, it is easier for employers to ‘move people around.’” Hmmm. How do you spell "exploitation?"
I began to wonder who would enlist to work under the ATLAS culture. To help Ann Taylor find the best candidates, I formulated this brief employment questionnaire, along with the desirable responses below.
1) Oh no! Your Aunt Etta fell and she's in the hospital with a broken hip. She needs you to help her complete her Medicare forms. But it's the end of the month, and your store manager says if you miss any time, you'll risk being demoted. Which of the following BEST describes the action you would take?
a) Come in to the store and focus on making my sales number. I'll visit Aunt Etta later.
b) Visit Aunt Etta and see if I can persuade my manager not to demote me.
c) I'd have to think about it.
2) In sales, ethics
a) includes doing what is right for the customer
b) can probably be found in the dictionary somewhere
c) not sure why I would need to know this
3) You’re behind in achieving your weekly sales number. You have a customer who wants a dress and some accessories, but she only has $150 to spend. She likes a dress that’s on sale. You should
a) find out the credit limit on her Visa and steer her toward more expensive merchandise.
b) help her find a suitable combination, even if it means she spends less than $150.
c) tell her that your recommendations are motivated by making your weekly sales quota.
4) Two women enter the store at the same time. One is unkempt and has a fussy toddler in tow. The other one is by herself, holding a Nordstrom shopping bag and a Kate Spade purse. To meet your expected productivity goals, how many seconds should it take you to greet the woman holding the Nordstrom bag?
a) 1 second
b) 30 seconds
c) about a minute
d) don't know. Shouldn't she have time to browse?
5) Essay question: I'm all for offering honest information to customers, except ____________________________ . (use additional pages, if needed)
Correct answers: 1-A; 2-C; 3-A; 4-a
ATLAS is a euphemism for Employee Manipulation. Its use portends some eyebrow-raising sales behaviors. As far as productivity gains for Ann Taylor, a note of caution: be careful what you wish for, you might get it!
Tuesday, September 9, 2008
The Right Sales Answers Are the Result of Asking the Right Questions
What happens when we make assumptions? The movie, The Return of the Pink Panther, provides a great lesson. Peter Sellers, playing the immortal character, Inspector Clouseau, sees a hotel clerk holding a dog on a leash and asks, "Does your dog bite?"
The clerk responds "no," and Clouseau reaches to pet the dog, which immediately bites his hand.
‘Ka-ching! I hit what-keeps-me-up-at-night pay dirt!’
"I thought you said your dog did not bite!" he exclaims. To which, the clerk replies, "That is not my dog."
In sales, how do we know if our prospective customers are answering the questions we think we're asking? How do we know if we're asking the best questions—or even the right questions? The Pink Panther vignette illustrates both humorously and poignantly what can happen if we take actions when there are incongruities between questions and perceived answers. I can relate to Clouseau's not-entirely-self-induced folly, and I wondered whether sales questions I've used could be similarly entertaining fodder—or, at the very least, instructive. So I reflected on my inventory of sales calls over 20 years and came up with two examples—one showing failure, the other success—that illustrate what can happen when you're asking questions in selling. My conclusion: Getting to the right answers requires careful thought and constant practice. There aren't any shortcuts, but there are some best practices.
A failure
I worked for several weeks to secure an appointment with the vice president of operations for a large national chain of dollar retail stores, which I'll call Stuff for a Buck. My company's product was a suite of bar code scanning hardware, software, label printers and services. To prepare, I studied the dollar chain's distribution, logistics and competitive challenges. I was ready for The Meeting at Stuff for a Buck.
After asking mostly ordinary empirical questions such as: "How many trucks? How many warehouses? How many shipments per day? And how many stores by region?" I moved to the pain part. (I was told early in my career that a big part of selling is to "find out what keeps the customer up at night.")
"What goes wrong in your daily operations?" I asked. The VP responded, "It's quite common to put the wrong load on the trailer. For example, the truck going to Charlotte might actually be carrying the inventory that's supposed to go to Wilmington. It happens quite often throughout our distribution network. We haven't found a way to prevent it."
Ka-ching! I hit what-keeps-me-up-at-night pay dirt! My supposedly keen industry insight caused me to extend his answer into the downstream logistics migraines that Stuff for a Buck must experience: heavy trailer loads of goods shipped in error all over the country. Goods in transit out of control and arriving in unintended locations. Stock outages. Customer service issues. After collecting some more data from the VP and offering him the hope that my proposal would eliminate his problems, we exchanged pleasantries about kids and golf, and I departed his office.
Using what he'd told me, I developed a proposal for a real-time, multi-warehouse inventory control system, including 200 handheld and mobile terminals and dozens of radio frequency access points. Inventory movement would be efficiently and accurately recorded with the simple pull of a scanner trigger. No more mistakes. No more manual data entry. No more paper. All this for $300,000—an excellent value considering the multimillion-dollar scale of the company's inventory and transportation costs. Of course, I forecast my sales opportunity to close in the current fiscal year and received kudos from my district and region managers for having uncovered such a valuable lead. High fives were given all around, and we believed we couldn't lose. I sent the sales proposal to my prospect and awaited the affirmative response, which never arrived.
Why? The major reason was because I hadn't explored or understood the problem's impact on the enterprise. As the VP later explained, "We sell everything for a dollar. Our customers don't expect to see specific items in stock, so it's not a headache if the wrong truckload backs up to the store's receiving dock. They'll unload it and put it out for sale. We don't like it, but it doesn't really matter to us in terms of our financial performance." End of story. My opportunity was lost. My prospect eventually became someone's customer. But not mine.
What did I learn? First, that the VP had answered my question as he heard it. I had asked, "What goes wrong?" when I thought I was asking, "What goes wrong that matters to you?" I misconstrued the gravity of the problem because it was the first one the VP mentioned.
Second, my industry knowledge had mutated into myopia, which prevented me from asking the right follow-on questions. Had I been a little more curious, I would have asked questions that would have helped me gain more insight, such as: "What is the consequence when the wrong goods show up in Charlotte? What does this problem cost per occurrence and annually? What impact do those costs have on overall financial objectives? How will this problem affect strategic goals if unabated?
Third, by tackling the first problem the VP described, I failed to complete the picture. I didn't ask, "What else?" followed by questions that would have not only exposed problems far more consequential to the organization but also provided me with a broader perspective on its operational issues.
Finally, my discovery process should not have been limited to talking with just one individual. I should have taken the time to ask networking questions, by which I could expand my contacts and gain a breadth of opinions and information—like a wiki model in which the value of the answer increases with multiple viewpoints.
A success
At a different company, I sold Oracle integration services to firms in the mid-Atlantic area. Our short-term objective was to sell services for installing the next version of Oracle's operating system, but my company's California-based staff and lack of local references made that challenging. Yet our consulting practice leaders were resolute on promoting such high-dollar, long-term projects. Consequently, my initial prospect-qualification questions centered on whether the prospect planned to upgrade to Oracle 11i in the next 12 months. Most didn't. After a few weeks of cold calling, I finally obtained an appointment with the IT manager of a distributor I'll call XYZ Healthcare Products, though he was reluctant to talk about upgrading.
When I arrived at XYZ, I learned that the IT manager had invited eight colleagues from other departments to join our meeting. We began our discussion about whether there was a business case to upgrade to 11i. The more questions I asked about upgrading, the clearer it became that it wasn't necessary. The conversation began to trail off as people looked at their cell phones and watches. Was it time to end the meeting and check my Blackberry for the Next Opportunity on the way to my car?
I didn't because something piqued my curiosity: Why were there were eight people assembled to discuss something that appeared all but decided? Although I didn't ask that question, I decided to ask a different one: "Assuming that technology and finances posed no constraints, what would you change right now about your business processes and operations?" The IT manager shared that a significant unsolved problem was that the company needed to produce a customer-ready invoice that could be placed in the shipment box during final packing, and Oracle's "vanilla" software couldn't provide that capability, causing XYZ to delay invoicing. His response surprised me because superficially the problem seemed minor, but his comment elicited nods from his colleagues.
That answer meant that the massive consulting project I needed to close had just devolved into a few billable hours to provide this seemingly-prosaic modification. Considering how insistent my practice managers were about selling upgrade work, I could have lost my sales resolve. Instead, I wanted to know more. What was it about this issue that created such visceral pain among these managers? As my mind filled with questions, I asked, "What does this limitation mean for your operations?" Their answers exposed issues ranging from customer service to logistics to receivables administration.
Probing the receivables challenges yielded insight into perhaps the greatest strategic challenge XYZ faced. The invoicing delay caused significant cash-flow problems. "Why haven't you fixed this already?" I asked. "We thought it couldn't be done, and, up to now, no one has taken the time to come here to meet with us." I explained that providing the change they requested was not complicated. XYZ's president was then called to join the meeting, and he excitedly corroborated what his managers had told me. The company signed a contract for the modification and became a client.
What did I learn? First, my central qualification question, "Do you plan to upgrade to 11i in the next 12 months?" was based only on what I wanted to sell; it risked missing opportunities because it ignored uncovering the outcomes my prospects required. By asking the right questions, I was able to learn that the immediate burning issue could be located in an unexpected place, and by providing a solution to address that issue, I could create a new sales path toward my higher-dollar work: the 11i upgrade service package.
Second, by removing constraints from the possible answers, I was able to eliminate boundaries that prospective customers often impose on themselves. Similar to vendors, prospective clients develop myopia based on perceived technical, financial or resource limits. Gathering requirements information that is unbound by those limits is important early in the sales process because discovering what the prospective customer wants is more valuable than discovering what he thinks he can get. Both questions must be asked, however, because the answers matter—and are often different.
How can salespeople improve discovery skills? The president of a large local real estate company recently told me that he views asking questions as the single most important selling skill—and that few agents do it. Extrapolate that problem to other industries, and it's no wonder that many companies suffer from low sales productivity.
What are the key habits for success?:
Bring an insatiable curiosity to your appointments.
Don't assume you know the answers to your most important questions.
Endeavor to see the world through your client's eyes. This empathetic view requires one to ask questions.
Listen for unexpected answers, probe further and have the agility to capitalize on the resulting opportunities.
In August, I performed a nationwide survey of sales professionals about how they use questions to discover customer needs. The answers revealed a wide range of patterns, techniques and favorite questions, suggesting that there are many pathways to successful discovery. The best idea I received was this one: "If I'm unclear about who, what, when, where and why, I keep asking questions."
The clerk responds "no," and Clouseau reaches to pet the dog, which immediately bites his hand.
‘Ka-ching! I hit what-keeps-me-up-at-night pay dirt!’
"I thought you said your dog did not bite!" he exclaims. To which, the clerk replies, "That is not my dog."
In sales, how do we know if our prospective customers are answering the questions we think we're asking? How do we know if we're asking the best questions—or even the right questions? The Pink Panther vignette illustrates both humorously and poignantly what can happen if we take actions when there are incongruities between questions and perceived answers. I can relate to Clouseau's not-entirely-self-induced folly, and I wondered whether sales questions I've used could be similarly entertaining fodder—or, at the very least, instructive. So I reflected on my inventory of sales calls over 20 years and came up with two examples—one showing failure, the other success—that illustrate what can happen when you're asking questions in selling. My conclusion: Getting to the right answers requires careful thought and constant practice. There aren't any shortcuts, but there are some best practices.
A failure
I worked for several weeks to secure an appointment with the vice president of operations for a large national chain of dollar retail stores, which I'll call Stuff for a Buck. My company's product was a suite of bar code scanning hardware, software, label printers and services. To prepare, I studied the dollar chain's distribution, logistics and competitive challenges. I was ready for The Meeting at Stuff for a Buck.
After asking mostly ordinary empirical questions such as: "How many trucks? How many warehouses? How many shipments per day? And how many stores by region?" I moved to the pain part. (I was told early in my career that a big part of selling is to "find out what keeps the customer up at night.")
"What goes wrong in your daily operations?" I asked. The VP responded, "It's quite common to put the wrong load on the trailer. For example, the truck going to Charlotte might actually be carrying the inventory that's supposed to go to Wilmington. It happens quite often throughout our distribution network. We haven't found a way to prevent it."
Ka-ching! I hit what-keeps-me-up-at-night pay dirt! My supposedly keen industry insight caused me to extend his answer into the downstream logistics migraines that Stuff for a Buck must experience: heavy trailer loads of goods shipped in error all over the country. Goods in transit out of control and arriving in unintended locations. Stock outages. Customer service issues. After collecting some more data from the VP and offering him the hope that my proposal would eliminate his problems, we exchanged pleasantries about kids and golf, and I departed his office.
Using what he'd told me, I developed a proposal for a real-time, multi-warehouse inventory control system, including 200 handheld and mobile terminals and dozens of radio frequency access points. Inventory movement would be efficiently and accurately recorded with the simple pull of a scanner trigger. No more mistakes. No more manual data entry. No more paper. All this for $300,000—an excellent value considering the multimillion-dollar scale of the company's inventory and transportation costs. Of course, I forecast my sales opportunity to close in the current fiscal year and received kudos from my district and region managers for having uncovered such a valuable lead. High fives were given all around, and we believed we couldn't lose. I sent the sales proposal to my prospect and awaited the affirmative response, which never arrived.
Why? The major reason was because I hadn't explored or understood the problem's impact on the enterprise. As the VP later explained, "We sell everything for a dollar. Our customers don't expect to see specific items in stock, so it's not a headache if the wrong truckload backs up to the store's receiving dock. They'll unload it and put it out for sale. We don't like it, but it doesn't really matter to us in terms of our financial performance." End of story. My opportunity was lost. My prospect eventually became someone's customer. But not mine.
What did I learn? First, that the VP had answered my question as he heard it. I had asked, "What goes wrong?" when I thought I was asking, "What goes wrong that matters to you?" I misconstrued the gravity of the problem because it was the first one the VP mentioned.
Second, my industry knowledge had mutated into myopia, which prevented me from asking the right follow-on questions. Had I been a little more curious, I would have asked questions that would have helped me gain more insight, such as: "What is the consequence when the wrong goods show up in Charlotte? What does this problem cost per occurrence and annually? What impact do those costs have on overall financial objectives? How will this problem affect strategic goals if unabated?
Third, by tackling the first problem the VP described, I failed to complete the picture. I didn't ask, "What else?" followed by questions that would have not only exposed problems far more consequential to the organization but also provided me with a broader perspective on its operational issues.
Finally, my discovery process should not have been limited to talking with just one individual. I should have taken the time to ask networking questions, by which I could expand my contacts and gain a breadth of opinions and information—like a wiki model in which the value of the answer increases with multiple viewpoints.
A success
At a different company, I sold Oracle integration services to firms in the mid-Atlantic area. Our short-term objective was to sell services for installing the next version of Oracle's operating system, but my company's California-based staff and lack of local references made that challenging. Yet our consulting practice leaders were resolute on promoting such high-dollar, long-term projects. Consequently, my initial prospect-qualification questions centered on whether the prospect planned to upgrade to Oracle 11i in the next 12 months. Most didn't. After a few weeks of cold calling, I finally obtained an appointment with the IT manager of a distributor I'll call XYZ Healthcare Products, though he was reluctant to talk about upgrading.
When I arrived at XYZ, I learned that the IT manager had invited eight colleagues from other departments to join our meeting. We began our discussion about whether there was a business case to upgrade to 11i. The more questions I asked about upgrading, the clearer it became that it wasn't necessary. The conversation began to trail off as people looked at their cell phones and watches. Was it time to end the meeting and check my Blackberry for the Next Opportunity on the way to my car?
I didn't because something piqued my curiosity: Why were there were eight people assembled to discuss something that appeared all but decided? Although I didn't ask that question, I decided to ask a different one: "Assuming that technology and finances posed no constraints, what would you change right now about your business processes and operations?" The IT manager shared that a significant unsolved problem was that the company needed to produce a customer-ready invoice that could be placed in the shipment box during final packing, and Oracle's "vanilla" software couldn't provide that capability, causing XYZ to delay invoicing. His response surprised me because superficially the problem seemed minor, but his comment elicited nods from his colleagues.
That answer meant that the massive consulting project I needed to close had just devolved into a few billable hours to provide this seemingly-prosaic modification. Considering how insistent my practice managers were about selling upgrade work, I could have lost my sales resolve. Instead, I wanted to know more. What was it about this issue that created such visceral pain among these managers? As my mind filled with questions, I asked, "What does this limitation mean for your operations?" Their answers exposed issues ranging from customer service to logistics to receivables administration.
Probing the receivables challenges yielded insight into perhaps the greatest strategic challenge XYZ faced. The invoicing delay caused significant cash-flow problems. "Why haven't you fixed this already?" I asked. "We thought it couldn't be done, and, up to now, no one has taken the time to come here to meet with us." I explained that providing the change they requested was not complicated. XYZ's president was then called to join the meeting, and he excitedly corroborated what his managers had told me. The company signed a contract for the modification and became a client.
What did I learn? First, my central qualification question, "Do you plan to upgrade to 11i in the next 12 months?" was based only on what I wanted to sell; it risked missing opportunities because it ignored uncovering the outcomes my prospects required. By asking the right questions, I was able to learn that the immediate burning issue could be located in an unexpected place, and by providing a solution to address that issue, I could create a new sales path toward my higher-dollar work: the 11i upgrade service package.
Second, by removing constraints from the possible answers, I was able to eliminate boundaries that prospective customers often impose on themselves. Similar to vendors, prospective clients develop myopia based on perceived technical, financial or resource limits. Gathering requirements information that is unbound by those limits is important early in the sales process because discovering what the prospective customer wants is more valuable than discovering what he thinks he can get. Both questions must be asked, however, because the answers matter—and are often different.
How can salespeople improve discovery skills? The president of a large local real estate company recently told me that he views asking questions as the single most important selling skill—and that few agents do it. Extrapolate that problem to other industries, and it's no wonder that many companies suffer from low sales productivity.
What are the key habits for success?:
Bring an insatiable curiosity to your appointments.
Don't assume you know the answers to your most important questions.
Endeavor to see the world through your client's eyes. This empathetic view requires one to ask questions.
Listen for unexpected answers, probe further and have the agility to capitalize on the resulting opportunities.
In August, I performed a nationwide survey of sales professionals about how they use questions to discover customer needs. The answers revealed a wide range of patterns, techniques and favorite questions, suggesting that there are many pathways to successful discovery. The best idea I received was this one: "If I'm unclear about who, what, when, where and why, I keep asking questions."
Monday, September 8, 2008
The Winner's Curse: Sometimes It's Better to Lose a Sale
The happiest event in a salesperson's life is winning a major sale against an archrival competitor. The second happiest is losing a sale to your competitor—and learning that the prospect became your competitor's worst support nightmare. We call it the Winner's Curse.
I know. I've been on both sides.
Having a customer engagement you'd have been better off without is more demoralizing than losing a coveted opportunity. For the also-ran sales teams, buyer remorse over a rival's product can provide a windfall boost to sales—without investing penny in marketing, product development or additional sales expenses. And no one can ever accuse a salesperson of mudslinging when he or she shares a bona fide negative reference about a competitor.
‘Worst of all, a new competitor had the opportunity to become a hero.’
A company I worked for many years ago was a premier systems provider to manufacturers and distributors but had little presence in the healthcare market. My employer wanted a beachhead account in this important and growing market. I won a substantial contract to supply a records management solution to the radiology department of a large, multi-site healthcare client I'll call Mega Health Services or MHS.
MHS wanted its new system to record an admission, print a barcode label, scan the label and track an X-ray jacket. Every admission. On demand. Thousands of times per day. We placed the order, and the barcode equipment was delivered and set up in every MHS radiology center.
That's when things started to go wrong. The printers started to jam. Many times. In many locations. Calls from upset radiology technicians and nurses poured into my cell phone. "My printer is jammed! It needs to be fixed! Now!" In a face-to-face meeting I can't describe as cordial, the corporate radiology manager spelled out her expectations to me: "Delivering the highest level of service to our patients is paramount to our organization. We expect our vendors to enable that. Period."
No one's fault
My local service manager offered no relief. "There's not much I can do," he told me. "Next time one of the printers jams, have them bring it in (to the service center)."
"You don't understand," I said. "They can't do that."
The service manager had fulfilled his forensic obligations—at least according to his job description. The situation worsened. More printers failed, and the phone calls I received became shriller.
Eventually, a manager in my company's consumables division told me the jamming problem might be related to a series of quality incidents at our manufacturing plant. He said that the thousands of labels I sold to MHS were wound too tightly onto the paper cores. That problem cascaded. The over-tightened labels had small amounts of oozing adhesive. At MHS, that adhesive adhered to the print heads as the labels passed through the machines. The labels peeled inside the printers and got stuck. To free the stuck labels, harried employees used whatever they could find—including metal implements, which caused the electrically-conductive print heads to short out. My company's warranty didn't cover that problem.
"Fiasco" doesn't come close to describing the outcome. The concomitant problems took months to sort out, and MHS eventually replaced my company's equipment with a competitor's. The label revenue? Gone, too. Worst of all, a new competitor had the opportunity to become a hero, without incurring prospecting expenses, engineering costs and proof-of-concept costs. I had underwritten all of that, as part of the initial system sale.
What cauldron of issues created this Winner's Curse?
The general ledger account silos. When it came to revenue and expense accounting, my company didn't share anything between departments. In this Winner's Curse scenario, only one department received revenue credit for equipment: sales. The service manager's revenue came from service contracts, and he believed that warranty support was an expense to be controlled and minimized. And because support expenses weren't costed to sales, I had little incentive to reduce the risks. The Consumables division? It didn't receive credit for hardware sales or service contracts, even though its revenue was dependent. What kind of experiences do these accounting silos create? Just ask MHS's corporate radiology manager.
Prospect qualification. This focused on getting the sale, instead of gaining a valuable customer. My investigation traded off asking other valuable questions, including "will this prospect become a valuable customer for our organization?" or: "Can this prospect implement our solution?"
Poor customer expectation management. In client meetings during the sales process, we didn't discuss risks and minimized MHS' obligations. Many Winner's Curses begin when a vendor over-promises and under-delivers—instead of the other way around.
Lack of coordination and performance measurement. Quality control problems at the label plant. Equipment failures. Viscerally unhappy customers. Was anyone watching these not-so-disparate events and preparing a coordinated response? Each department had a separate set of performance measurements, none of which mitigated the risk that the customer might be completely dissatisfied.
By any analysis, this Winner's Curse was my company's self-inflicted debacle. But in many situations, customers are complicit because they fail to see beyond their own self interest. They don't recognize that a valuable business relationship provides mutual benefits. Customers benefit from what a product provides—and vendors must make a meaningful profit providing it.
Some sales engagements aren't worth winning. How can you know? There are two keys. First, have a clear picture of what a Winner's Curse looks like and what it means for your organization. Second, ask the right questions to expose the risks. Those questions must be asked not only at the beginning but also throughout the customer relationship.
I know. I've been on both sides.
Having a customer engagement you'd have been better off without is more demoralizing than losing a coveted opportunity. For the also-ran sales teams, buyer remorse over a rival's product can provide a windfall boost to sales—without investing penny in marketing, product development or additional sales expenses. And no one can ever accuse a salesperson of mudslinging when he or she shares a bona fide negative reference about a competitor.
‘Worst of all, a new competitor had the opportunity to become a hero.’
A company I worked for many years ago was a premier systems provider to manufacturers and distributors but had little presence in the healthcare market. My employer wanted a beachhead account in this important and growing market. I won a substantial contract to supply a records management solution to the radiology department of a large, multi-site healthcare client I'll call Mega Health Services or MHS.
MHS wanted its new system to record an admission, print a barcode label, scan the label and track an X-ray jacket. Every admission. On demand. Thousands of times per day. We placed the order, and the barcode equipment was delivered and set up in every MHS radiology center.
That's when things started to go wrong. The printers started to jam. Many times. In many locations. Calls from upset radiology technicians and nurses poured into my cell phone. "My printer is jammed! It needs to be fixed! Now!" In a face-to-face meeting I can't describe as cordial, the corporate radiology manager spelled out her expectations to me: "Delivering the highest level of service to our patients is paramount to our organization. We expect our vendors to enable that. Period."
No one's fault
My local service manager offered no relief. "There's not much I can do," he told me. "Next time one of the printers jams, have them bring it in (to the service center)."
"You don't understand," I said. "They can't do that."
The service manager had fulfilled his forensic obligations—at least according to his job description. The situation worsened. More printers failed, and the phone calls I received became shriller.
Eventually, a manager in my company's consumables division told me the jamming problem might be related to a series of quality incidents at our manufacturing plant. He said that the thousands of labels I sold to MHS were wound too tightly onto the paper cores. That problem cascaded. The over-tightened labels had small amounts of oozing adhesive. At MHS, that adhesive adhered to the print heads as the labels passed through the machines. The labels peeled inside the printers and got stuck. To free the stuck labels, harried employees used whatever they could find—including metal implements, which caused the electrically-conductive print heads to short out. My company's warranty didn't cover that problem.
"Fiasco" doesn't come close to describing the outcome. The concomitant problems took months to sort out, and MHS eventually replaced my company's equipment with a competitor's. The label revenue? Gone, too. Worst of all, a new competitor had the opportunity to become a hero, without incurring prospecting expenses, engineering costs and proof-of-concept costs. I had underwritten all of that, as part of the initial system sale.
What cauldron of issues created this Winner's Curse?
The general ledger account silos. When it came to revenue and expense accounting, my company didn't share anything between departments. In this Winner's Curse scenario, only one department received revenue credit for equipment: sales. The service manager's revenue came from service contracts, and he believed that warranty support was an expense to be controlled and minimized. And because support expenses weren't costed to sales, I had little incentive to reduce the risks. The Consumables division? It didn't receive credit for hardware sales or service contracts, even though its revenue was dependent. What kind of experiences do these accounting silos create? Just ask MHS's corporate radiology manager.
Prospect qualification. This focused on getting the sale, instead of gaining a valuable customer. My investigation traded off asking other valuable questions, including "will this prospect become a valuable customer for our organization?" or: "Can this prospect implement our solution?"
Poor customer expectation management. In client meetings during the sales process, we didn't discuss risks and minimized MHS' obligations. Many Winner's Curses begin when a vendor over-promises and under-delivers—instead of the other way around.
Lack of coordination and performance measurement. Quality control problems at the label plant. Equipment failures. Viscerally unhappy customers. Was anyone watching these not-so-disparate events and preparing a coordinated response? Each department had a separate set of performance measurements, none of which mitigated the risk that the customer might be completely dissatisfied.
By any analysis, this Winner's Curse was my company's self-inflicted debacle. But in many situations, customers are complicit because they fail to see beyond their own self interest. They don't recognize that a valuable business relationship provides mutual benefits. Customers benefit from what a product provides—and vendors must make a meaningful profit providing it.
Some sales engagements aren't worth winning. How can you know? There are two keys. First, have a clear picture of what a Winner's Curse looks like and what it means for your organization. Second, ask the right questions to expose the risks. Those questions must be asked not only at the beginning but also throughout the customer relationship.
Wednesday, September 3, 2008
"That's not our policy--and no, we don't want to hear from you!"
How’s this for a conundrum?
Help the customer or Enforce company policy. Enforce policy or help the customer.
Office Depot’s management created this very quandary when my friend Elena visited their brand, spanking new store in Albuquerque last week.
She wanted a copy of a two-page color document, but she was told she had to wait because the store’s policy was to service register customers first. Watching customer after customer enter the store and leave with a purchase, she gave up waiting after one hour. The manager overseeing the few overworked employees could hardly have been less contrite. After she complained about the long wait, he offered “you can come back later this afternoon and pick up your copy.” How’s that for service?
What could have been the outcome if the store manager wasn’t conflicted in his goals? What if he were empowered (to use a now-popular term) to offer to courier Elena’s document to her or to ship it overnight? Instead, the policy shackles at Office Depot prevailed, to everyone’s detriment.
During Elena’s wait, she purchased a few items, and decided to voice her complaint via the website printed on her receipt, which helpfully shared how much Office Depot values her opinion. After carefully crafting an informative message about her poor Office Depot experience, her transmission was promptly rejected. Why? She declined to include her gender and annual household income among the information she submitted. Clearly, any mantra espousing customer centricity isn’t mounted in a frame at the home office.
My friend Elena left Office Depot without her color copies, and without Office Depot learning about her experience. She won’t visit the store again. And yes, she will tell twenty people about her experience.
Office Depot, are you listening? Maybe Staples will!
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