“There’s nothing wrong with getting a ‘no’ answer on a purchase decision as long you get that answer early in the sales process.” This admonition came from a VP of Sales I worked with. He wasn’t being glib. “No” answers are a sales fact of life. The VP recognized the strategic importance of knowing how to vet opportunities before the scarce resources of time and money were committed.
The common term for this process is qualification. What’s uncommon is thinking about qualification from a strategic perspective, and then managing the associated risk. Many companies leave qualification to the tactical discretion of the sales force. The results are clearly mixed. Some salespeople languish by pursuing unknowingly risky opportunities that other salespeople might quickly reject. Some salespeople may readily reject opportunities that might be valuable for the company because their commission plans don’t provide an adequate reward. In any case, when a sales force is experiencing disparate achievement results, qualification processes should be on the radar as one probable cause.
The symptoms will be manifest in statements like these, taken from my own selling past:
“They would have purchased, but they told me they couldn’t afford my proposed solution.”
“They selected a vendor whose Senior VP is the brother-in-law of their VP of Operations.”
“They postponed their decision. It’s not a priority for them now.”
“They can’t buy anything until they replace their legacy IT infrastructure. They expect to change over in about two years.”
Successful sales organizations understand that vetting the best sales opportunities requires the same strategic visioning and thought as how to invest in new product development or how to fund expansion. Why? Because selling requires the commitment of significant scarce resources—mainly time and money. Companies that excel at managing sales risk early in the process possess a key advantage over those that don’t.
How do companies formulate qualification strategies and the questions that follow? They begin with understanding the value their products and services provide. That understanding yields insight into what prospect companies and opportunities might benefit from them the most. Those insights are converted to profiles of organizations or persons, and those profiles can be further described by more detailed attributes. From there, qualification questions can be created.
Executives should ask themselves “Do we have a set of qualification questions that is consistently effective for identifying the most valuable opportunities for us to pursue? What are the greatest selling risks that we face? How do our top performers qualify opportunities? Are we disqualifying potentially valuable opportunities? And last—but not least—“Does our sales incentive plan encourage our sales team to pursue opportunities that are valuable to our organization? ”
But building effective qualification doesn’t stop there. Qualification questions are never static; they are refined by reviewing sales losses and wins. For losses, the top question is “What didn’t we know at the time the purchase decision was made?” (With that in mind, it’s not difficult to determine the questions that should have been asked early from the list of sales outcomes above.) For every win, the questions should start with “Why did this customer buy?”
What are the best questions to ask? In over twenty years of selling of high technology products and services, I uncovered risks in sales outcomes that can be mitigated through asking the following set of questions, which I term the Four Green Lights. (Note that all questions have a ‘yes’ or a ‘no’ answer.)
1. Solution fit: Does my prospective customer have a strategic challenge or operational issue that can be solved using my product or service?
2. Access: Can I get access to the person or people who have the authority to commit and spend the financial resources to procure my product or service?
3. Money: Will my prospective customer pay me what I am likely to charge for my product or service?
4. Timeframe: Will my prospective customer purchase from me within a timeframe that matches my planning horizon?
How should your company manage the risk? The answer depends on your appetite for it. Even four “yes” answers doesn’t begin to address all the sales risks that could be encountered. But one or more “no” answers might represent a risk level that is clearly higher than a company can financially accept. For example, if I don’t have access to the people most influential in making a purchase decision, the likelihood of a successful sales outcome is very small (based on my experience). Today, I wouldn’t pursue such an opportunity, so it’s imperative that I uncover that condition through early qualification. A situational analysis of your company’s competitive position might cause you to eliminate some of these qualification questions and add others.
How does your organization view the connection between strategy, risk management, and sales opportunity qualification? Are your processes related? Do your qualification steps support your business strategies? What do you believe are some best practices?
Tuesday, January 6, 2009
The Hidden Risks of Social Networks
Not to throw cold water on anyone’s exuberance, but social networks could destroy your sales strategy, and your company along with it.
Why? Because technology and the Internet propel unplanned situations and events at unprecedented speed. So it’s important to recognize that the same social forces that create significant value also have the power to annihilate it. How you manage the risks will determine whether history will judge you to be a New Media Ninja or another unprepared victim. While new media and social networking present boundless opportunities, no discussion is complete without asking what could go wrong, and what actions should be taken.
Risk Silos
Consider the catastrophic outcome that Bob Furniss shared in which a disgruntled 15-year-old started a FaceBook group called "ACME Tied to Kill Me."
As he described it, “She outlined her dissatisfaction. Suddenly, there were others who joined the group. Soon there were hundreds of links to personal and business blogs and complaint sites.” Twenty years ago, an unhappy teenager would have limited capacity to disseminate a product grievance, and would not have posed a measurable threat. That was then. This is now. The CRM breakdown likely led to a significant financial problem for the company. How many times do you think Acme’s Director of Customer Support said “Woulda . . . Coulda . .. . Shoulda” when he met with the company’s board?
How did ACME blow it? By failing to manage risks across the organization. CRM risks ARE financial risks. Unfortunately, many organizations like ACME silo risk management in the same way as they do business processes and information. Could this problem have happened if ACME’s VP of Customer Experience warned their CFO that through the Internet, an unhappy customer could singlehandedly undermine her best cash flow projections? Or, if the CFO had considered how events outside of market cycles and interest-rate fluctuations might put her imperil her financial planning? What preemptive actions could ACME have taken? In the absence of such strategic planning, the unprepared ACME managers must have appeared like deer in the headlights to this media-savvy kid.
For companies that value brand identity, social networks create unique risks as well. For example, a vexing trend is for consumers—not marketers—to use social networks to define product and brand attributes. While social media create the opportunity for products to better match required consumer outcomes, this shift in information power underscores the importance of asking the right risk-related questions:
• If we lose control of product designs and life cycles, what strategic risks would we face?
• What if the resulting product design or image is one we don’t want, can’t support, or both?
• What operational challenges could occur if we can’t manufacture the desired products in the right quantity at the right time?
While the operational questions highlight risks that companies have faced and managed for many years, social networks have rendered past mitigation strategies obsolete, so new strategies must be developed.
Strategy risk
In his article, Like On-Demand, the Social Web May Have Unintended Consequences for Businesses, Denis Pombriant highlighted another set of risks. He writes, “My bet is that social computing will provide us with an avalanche of new data from customers that must be analyzed, and that's where I think we can look for unintended consequences.”
Those unintended consequences are the associated risks of implementing the wrong strategy, or implementing the right strategy the wrong way. According to Denis, one risk is “that we take the new information we collect too seriously and that we fail to perform analysis and challenge the results. If that happens, look for companies running off in strange directions chasing what amounts to unicorns. The odds are that some companies will fall into this self-baited trap...”
Reputation Risk
If you’ve worked in sales for few years, you’ve probably heard a manager in your company say “If we can just get meetings with the right people, our product sells itself.” Clearly, the best products in the world can’t be widely sold if influential people don’t know about them.
Based on that imperative, it’s easy to understand why social networking tools are vital for reducing sales risk.
John Todor explained why in his CustomerThink article, Social Networks and Online Communities Create Elastic Ties and Surprisingly Powerful Pay-Offs: “The power of online social networks comes, not from whom you know directly, but from the people the people you know know. People who actively pursue weak-tie relationships stand to gain substantial benefits. They can quickly take advantage of emerging opportunities, find collaborators, find jobs, find employees and build a pool of advocates.”
Barry Trailer’s blog provides empirical proof:
“For a test, 30 sales executives were selected to interview. Using LinkedIn members of our network were asked to facilitate an introduction to these people we had never met. Surprisingly, 29 of these individuals accepted the request and passed it on to their contacts with a personal note of introduction. More surprising, 23 of those targeted executives (including people in Europe and the Far East) accepted our request, and offered to consider helping our research effort.
In follow up, 18 of the 23 participated – a 60% hit rate! A much more favorable result compared to cold calling.”
But these discussions don’t tell the risk part of the story. As I’ve learned the hard way, prospects hold very high expectations from social connections, and underperformance in the sales process causes backfires that can remain ugly. For example, one company I worked with believed its account executive was so well connected in a prospect’s organization that they didn’t apply customary rigor to navigating the steps to the sale. “No need for account qualification, value propositions, or financial justification because we know Joe through Steve,” they said. They were wrong. Not only was Joe disappointed, but he called Steve and asked “How did you ever get involved with these guys?” Beyond the introductory social connection chit-chat, somebody still needs to sell something. Complacency gets in the way.
Further, I was struck by a certain irony as I read Barry’s findings. Although we admonish our school-age children to be wary of social networking tools on the web, the high ratio of invitation acceptance he describes suggests that executives don’t exercise similar caution (albeit they need to do so for different reasons). Does the risk of a damaged reputation seem so remote that executives readily accept requests from cyber-strangers to endorse them? Will the current success ratio Barry discovered diminish as social networking becomes more mature, and executives learn how carefully-built reputations can become damaged? Will we see a similar wave of caution as we did with chat rooms, FaceBook, and MySpace?
Stay tuned.
(Apologies to Rob Cross for corrupting the title of his excellent book, The Hidden Power of Social Networks.)
Why? Because technology and the Internet propel unplanned situations and events at unprecedented speed. So it’s important to recognize that the same social forces that create significant value also have the power to annihilate it. How you manage the risks will determine whether history will judge you to be a New Media Ninja or another unprepared victim. While new media and social networking present boundless opportunities, no discussion is complete without asking what could go wrong, and what actions should be taken.
Risk Silos
Consider the catastrophic outcome that Bob Furniss shared in which a disgruntled 15-year-old started a FaceBook group called "ACME Tied to Kill Me."
As he described it, “She outlined her dissatisfaction. Suddenly, there were others who joined the group. Soon there were hundreds of links to personal and business blogs and complaint sites.” Twenty years ago, an unhappy teenager would have limited capacity to disseminate a product grievance, and would not have posed a measurable threat. That was then. This is now. The CRM breakdown likely led to a significant financial problem for the company. How many times do you think Acme’s Director of Customer Support said “Woulda . . . Coulda . .. . Shoulda” when he met with the company’s board?
How did ACME blow it? By failing to manage risks across the organization. CRM risks ARE financial risks. Unfortunately, many organizations like ACME silo risk management in the same way as they do business processes and information. Could this problem have happened if ACME’s VP of Customer Experience warned their CFO that through the Internet, an unhappy customer could singlehandedly undermine her best cash flow projections? Or, if the CFO had considered how events outside of market cycles and interest-rate fluctuations might put her imperil her financial planning? What preemptive actions could ACME have taken? In the absence of such strategic planning, the unprepared ACME managers must have appeared like deer in the headlights to this media-savvy kid.
For companies that value brand identity, social networks create unique risks as well. For example, a vexing trend is for consumers—not marketers—to use social networks to define product and brand attributes. While social media create the opportunity for products to better match required consumer outcomes, this shift in information power underscores the importance of asking the right risk-related questions:
• If we lose control of product designs and life cycles, what strategic risks would we face?
• What if the resulting product design or image is one we don’t want, can’t support, or both?
• What operational challenges could occur if we can’t manufacture the desired products in the right quantity at the right time?
While the operational questions highlight risks that companies have faced and managed for many years, social networks have rendered past mitigation strategies obsolete, so new strategies must be developed.
Strategy risk
In his article, Like On-Demand, the Social Web May Have Unintended Consequences for Businesses, Denis Pombriant highlighted another set of risks. He writes, “My bet is that social computing will provide us with an avalanche of new data from customers that must be analyzed, and that's where I think we can look for unintended consequences.”
Those unintended consequences are the associated risks of implementing the wrong strategy, or implementing the right strategy the wrong way. According to Denis, one risk is “that we take the new information we collect too seriously and that we fail to perform analysis and challenge the results. If that happens, look for companies running off in strange directions chasing what amounts to unicorns. The odds are that some companies will fall into this self-baited trap...”
Reputation Risk
If you’ve worked in sales for few years, you’ve probably heard a manager in your company say “If we can just get meetings with the right people, our product sells itself.” Clearly, the best products in the world can’t be widely sold if influential people don’t know about them.
Based on that imperative, it’s easy to understand why social networking tools are vital for reducing sales risk.
John Todor explained why in his CustomerThink article, Social Networks and Online Communities Create Elastic Ties and Surprisingly Powerful Pay-Offs: “The power of online social networks comes, not from whom you know directly, but from the people the people you know know. People who actively pursue weak-tie relationships stand to gain substantial benefits. They can quickly take advantage of emerging opportunities, find collaborators, find jobs, find employees and build a pool of advocates.”
Barry Trailer’s blog provides empirical proof:
“For a test, 30 sales executives were selected to interview. Using LinkedIn members of our network were asked to facilitate an introduction to these people we had never met. Surprisingly, 29 of these individuals accepted the request and passed it on to their contacts with a personal note of introduction. More surprising, 23 of those targeted executives (including people in Europe and the Far East) accepted our request, and offered to consider helping our research effort.
In follow up, 18 of the 23 participated – a 60% hit rate! A much more favorable result compared to cold calling.”
But these discussions don’t tell the risk part of the story. As I’ve learned the hard way, prospects hold very high expectations from social connections, and underperformance in the sales process causes backfires that can remain ugly. For example, one company I worked with believed its account executive was so well connected in a prospect’s organization that they didn’t apply customary rigor to navigating the steps to the sale. “No need for account qualification, value propositions, or financial justification because we know Joe through Steve,” they said. They were wrong. Not only was Joe disappointed, but he called Steve and asked “How did you ever get involved with these guys?” Beyond the introductory social connection chit-chat, somebody still needs to sell something. Complacency gets in the way.
Further, I was struck by a certain irony as I read Barry’s findings. Although we admonish our school-age children to be wary of social networking tools on the web, the high ratio of invitation acceptance he describes suggests that executives don’t exercise similar caution (albeit they need to do so for different reasons). Does the risk of a damaged reputation seem so remote that executives readily accept requests from cyber-strangers to endorse them? Will the current success ratio Barry discovered diminish as social networking becomes more mature, and executives learn how carefully-built reputations can become damaged? Will we see a similar wave of caution as we did with chat rooms, FaceBook, and MySpace?
Stay tuned.
(Apologies to Rob Cross for corrupting the title of his excellent book, The Hidden Power of Social Networks.)
Goofus and Gallant Make CRM Decisions
For those who may not be familiar with Goofus and Gallant, the Highlights Magazine feature contrasts how two children—Goofus, who is bad, and Gallant, who is good—make divergent ethical choices when faced with the same set of circumstances. The text is presented as captions below simple drawings that illustrate the action. (A quote from a 1960 Highlights: “Goofus turns on the television when there are guests; whenever guests arrive, Gallant turns off the television at once.”)
Reading Goofus and Gallant is a great dose of reality on days when I’m feeling totally ethical. I always ask myself “What would I do?” While I don’t think I’m as flagrantly selfish as Goofus, I’m clearly socially and ethically maladjusted next to Gallant’s consistent kindness, thoughtfulness, and sense of fair play.
What if Goofus and Gallant outgrew their permanently juvenile forms and became grown-up executives faced with contemporary ethical decisions? How might they decide when they aren’t guided by flowcharts, formulas, and sophisticated software, but rather when answering the question “what is the right thing to do?”
Here are some examples:
“Goofus believes that only frequent passengers on his airline have the right to expect good service. Gallant believes all passengers are entitled to a good flying experience.”
“Goofus markets his products as ‘green’ even though he buys many materials from unregulated offshore factories; Gallant only sells products that meet rigorous standards for responsible environmental stewardship.”
“Goofus licenses his company’s logo to other companies whose practices and motives are unknown so that he can make an extra profit; Gallant values the trust that his customers place in his company.”
“Goofus uses direct mail to circumvent regulations so he can get senior citizens to accept telemarketing pitches; Gallant complies with the FTC’s vendor guidelines for no-call lists.”
“Goofus saves IT costs by not updating infrastructure and information security software; Gallant believes the privacy of his customers’ transaction information is a strategic priority.”
"Goofus optimizes his personal exit strategy when making CRM decisions; Gallant thinks about what’s best for his employees and customers.”
As sales, marketing, and business development professionals, we have at our disposal unprecedented power to create positive outcomes for many people, or to turn that power toward tactics that exploit trust and erode value. The overwhelming majority of the decisions we make are not constrained by laws and regulations. Even if Gallant’s decisions represent an unattainable ethical purity, isn’t it worth asking “what is the right thing to do?”
Reading Goofus and Gallant is a great dose of reality on days when I’m feeling totally ethical. I always ask myself “What would I do?” While I don’t think I’m as flagrantly selfish as Goofus, I’m clearly socially and ethically maladjusted next to Gallant’s consistent kindness, thoughtfulness, and sense of fair play.
What if Goofus and Gallant outgrew their permanently juvenile forms and became grown-up executives faced with contemporary ethical decisions? How might they decide when they aren’t guided by flowcharts, formulas, and sophisticated software, but rather when answering the question “what is the right thing to do?”
Here are some examples:
“Goofus believes that only frequent passengers on his airline have the right to expect good service. Gallant believes all passengers are entitled to a good flying experience.”
“Goofus markets his products as ‘green’ even though he buys many materials from unregulated offshore factories; Gallant only sells products that meet rigorous standards for responsible environmental stewardship.”
“Goofus licenses his company’s logo to other companies whose practices and motives are unknown so that he can make an extra profit; Gallant values the trust that his customers place in his company.”
“Goofus uses direct mail to circumvent regulations so he can get senior citizens to accept telemarketing pitches; Gallant complies with the FTC’s vendor guidelines for no-call lists.”
“Goofus saves IT costs by not updating infrastructure and information security software; Gallant believes the privacy of his customers’ transaction information is a strategic priority.”
"Goofus optimizes his personal exit strategy when making CRM decisions; Gallant thinks about what’s best for his employees and customers.”
As sales, marketing, and business development professionals, we have at our disposal unprecedented power to create positive outcomes for many people, or to turn that power toward tactics that exploit trust and erode value. The overwhelming majority of the decisions we make are not constrained by laws and regulations. Even if Gallant’s decisions represent an unattainable ethical purity, isn’t it worth asking “what is the right thing to do?”
A Sales Team Needs More Than "High ROI" and "Low TCO" To Compete
“How will your IT solution help me sell more pizza?”
That’s how one COO recently confronted a team of salespeople from a software integrator when they showed up for their first sales call. The salespeople could not answer the question. They had prepared for a different discussion, and the PowerPoint they brought, but never showed, included lots of technical information, along with charts and graphs showing ROI (Return on Investment) and TCO (Total Cost of Ownership)—none of which offered insight about how to solve COO’s strategic challenge. The meeting was terminated and rescheduled for a later date. The final outcome? It’s described toward end of this blog.
The pain of that interaction underscores why one of my clients, a large software developer, initiated a worldwide program to help their resellers shift from selling mainly small $20,000 Information Technology (IT) projects—which are frequently vetted using ROI calculations—to selling larger enterprise projects that require sales teams to prove strategic value along with financial returns. As enterprises adopt governance policies and “balanced scorecards” designed to promote alignment between IT investments and corporate strategy, the need to adopt a sales process that proves value beyond the achievement of simple financial calculations or Key Performance Indicators (KPI’s) has never been stronger. The project I’m currently working on provides me the opportunity to facilitate this metamorphosis.
But what’s wrong with talking to prospects about ROI and TCO?
Nothing, other than the fact that many marketers and salespeople simply fail to put these metrics in any context. Case in point: This week, RFID Solutions Online sent me an e-newsletter with the subject “Find The ROI In Your Asset Tracking Initiatives”. But the accompanying article summary doesn’t connect the value of asset tracking to financial or operational strategy.
And it’s not that there isn’t a connection. There is, but I couldn’t find it anywhere in the email. So the over-worn statement “Find The ROI . . .” isn’t visceral to C-Level executives who live and breathe strategy. This example is the tactical equivalent of a quarterback leading an offense to the opponent’s 10-yard line, and on third down saying “I think we’ve gone far enough.”
Why does ROI/TCO alone fall short? Because the “heavy lifting” in sales is in enabling prospects first to believe the facts about an issue, then to care about the issue, then to act to solve it. ROI and TCO are reasonably helpful for the belief stage (“We used the numbers the client provided for our ROI calculations!”), but marginally effective for answering the question “Why should I care?” And, if no influential individuals in an organization care about a given issue, would anyone wager that they would act to solve it?
So, beyond ROI and TCO, how can a company gain a sales advantage?
To answer that question, let’s look at how the sales team managed its setback with the pizza company COO. After returning to their office, the group took the time to formulate a set of questions about the growth strategy for the pizza company, including questions about finance, supply chain logistics, CRM, and human resources. They reformulated a presentation and met with the COO about two weeks later. Their project was approved and they won the opportunity.
What did the team figure out?
First, the team realized that positioning their offering to enable growth was mission critical for both vendor and prospect. By making the shift from a purely financial appeal to a strategic appeal, the sales team minimized the risk of “no decision.” In addition, another important outcome occurred. Because strategic growth impacts every operating unit in an organization, the sales team opened relationships with a cross-functional team of senior executives. Prior to that change, the vendor’s sales team networked only in the IT department. Finally, the sales team was rewarded with an unintentional benefit: they faced fewer competitors. Before changing their approach, the sales team competed with every vendor touting high ROI—some of which were selling IT solutions. Now, only two vendors offered a path to the strategic growth the COO required.
How did the sales team realign to address the COO’s problem, and what steps did they follow from beginning to end?
The team leveraged the competencies they already had, but had never effectively combined. They used empathetic listening skills, systems analysis techniques, and business acumen to convert what could have been a certain loss. All of these competencies rarely exist in one individual, so collaborative processes and effective team leadership were also required. The specific steps the team used will be covered in next week’s blog, “How to Uncover Strategic Opportunities through Strategic Questions.”
That’s how one COO recently confronted a team of salespeople from a software integrator when they showed up for their first sales call. The salespeople could not answer the question. They had prepared for a different discussion, and the PowerPoint they brought, but never showed, included lots of technical information, along with charts and graphs showing ROI (Return on Investment) and TCO (Total Cost of Ownership)—none of which offered insight about how to solve COO’s strategic challenge. The meeting was terminated and rescheduled for a later date. The final outcome? It’s described toward end of this blog.
The pain of that interaction underscores why one of my clients, a large software developer, initiated a worldwide program to help their resellers shift from selling mainly small $20,000 Information Technology (IT) projects—which are frequently vetted using ROI calculations—to selling larger enterprise projects that require sales teams to prove strategic value along with financial returns. As enterprises adopt governance policies and “balanced scorecards” designed to promote alignment between IT investments and corporate strategy, the need to adopt a sales process that proves value beyond the achievement of simple financial calculations or Key Performance Indicators (KPI’s) has never been stronger. The project I’m currently working on provides me the opportunity to facilitate this metamorphosis.
But what’s wrong with talking to prospects about ROI and TCO?
Nothing, other than the fact that many marketers and salespeople simply fail to put these metrics in any context. Case in point: This week, RFID Solutions Online sent me an e-newsletter with the subject “Find The ROI In Your Asset Tracking Initiatives”. But the accompanying article summary doesn’t connect the value of asset tracking to financial or operational strategy.
And it’s not that there isn’t a connection. There is, but I couldn’t find it anywhere in the email. So the over-worn statement “Find The ROI . . .” isn’t visceral to C-Level executives who live and breathe strategy. This example is the tactical equivalent of a quarterback leading an offense to the opponent’s 10-yard line, and on third down saying “I think we’ve gone far enough.”
Why does ROI/TCO alone fall short? Because the “heavy lifting” in sales is in enabling prospects first to believe the facts about an issue, then to care about the issue, then to act to solve it. ROI and TCO are reasonably helpful for the belief stage (“We used the numbers the client provided for our ROI calculations!”), but marginally effective for answering the question “Why should I care?” And, if no influential individuals in an organization care about a given issue, would anyone wager that they would act to solve it?
So, beyond ROI and TCO, how can a company gain a sales advantage?
To answer that question, let’s look at how the sales team managed its setback with the pizza company COO. After returning to their office, the group took the time to formulate a set of questions about the growth strategy for the pizza company, including questions about finance, supply chain logistics, CRM, and human resources. They reformulated a presentation and met with the COO about two weeks later. Their project was approved and they won the opportunity.
What did the team figure out?
First, the team realized that positioning their offering to enable growth was mission critical for both vendor and prospect. By making the shift from a purely financial appeal to a strategic appeal, the sales team minimized the risk of “no decision.” In addition, another important outcome occurred. Because strategic growth impacts every operating unit in an organization, the sales team opened relationships with a cross-functional team of senior executives. Prior to that change, the vendor’s sales team networked only in the IT department. Finally, the sales team was rewarded with an unintentional benefit: they faced fewer competitors. Before changing their approach, the sales team competed with every vendor touting high ROI—some of which were selling IT solutions. Now, only two vendors offered a path to the strategic growth the COO required.
How did the sales team realign to address the COO’s problem, and what steps did they follow from beginning to end?
The team leveraged the competencies they already had, but had never effectively combined. They used empathetic listening skills, systems analysis techniques, and business acumen to convert what could have been a certain loss. All of these competencies rarely exist in one individual, so collaborative processes and effective team leadership were also required. The specific steps the team used will be covered in next week’s blog, “How to Uncover Strategic Opportunities through Strategic Questions.”
Is Sales Necessary? ... Or Necessarily Evil?
Salespeople fight a "guilty until proven innocent" reputation when working with customers. I know, because as a salesperson I’ve battled it for over 20 years. The customer reaction isn’t surprising. Sales people are on the customer-relationship front line, and they absorb the brunt of buyer vitriol. In fact, a survey that DDI International recently conducted with 2,705 corporate buyers worldwide, “2007-2008 Global Sales Perceptions Report,” documented the problem with painful clarity. The report reveals how salespeople are perceived, and over 47% of US survey respondents indicated that they “would not be proud to be called a salesperson.” According to the report, “the most common description across all countries was that Sales is ‘a necessary evil.”
Given the billions of dollars that are spent annually on sales effectiveness training and CRM systems, this sentiment is an indictment on the sales profession, and it says we’re failing at our efforts to improve our face-to-face experiences with our customers. Not all is bad, however. Tremendous opportunities exist for enterprises that strategically change how their sales forces engage with customers.
Why do buyers have antipathy for sales people?
To answer this question, it’s necessary to look beyond salespeople themselves and to the culture and systems under which salespeople have worked for several generations. First, ever since sales became a distinct entity in commercial enterprises, the tactical objectives of the sales force have been dictated by corporate revenue goals. A closely-watched metric by investment analysts, revenue goals are developed in the board room, and trickle down to the individual sales representative through a sometimes-perverse and inherently flawed calculus, the end-point of which is called a quota. This all-important number represents the salesperson’s revenue commitment to the organization, and it carries ponderous weight. With revenue as the focal point of sales-performance discussions, quota over-achievement often means significant financial rewards; under-achievement compromises a salesperson’s ever-tenuous job stability.
As any quota-carrying salesperson or sales manager can attest, the assignment of sales quotas frequently involve rancorous negotiations. Some quotas are completely arbitrary, based on the direction fairy dust blows when it is thrown up in the air. Others are based on conditions that are outside of the salesperson’s control—market and economic forecasts, product and pricing forecasts, assumptions, and growth factors.
Quotas are half the story. The other half is how revenue is credited against sales quotas. This exercise often results in a smoke-and-mirrors game that is as much political as it is the application of accounting debits and credits. The result is an unwieldy multi-page document, sometimes called a Commission Plan, which can require a lawyer’s expertise to decipher for all the ambiguity. Such complexity prompted one Vice President of Sales at a company I worked for to envision a commission plan that could fit on one side of a business card—a noble goal he never implemented.
So every day under this basic system of illogical quota calculation and revenue accrual, legions of salespeople engage with millions of customers worldwide. Lost in all the shouting and confusion are the answers to these questions: “What is valuable to the people and organizations that use our products?” And the corollary question, “How will our salespeople behave given the financial “ecosystem” we have created?” No wonder so many buyers decry their sales experiences. Any moniker purporting “customer-centricity” only serves to put lipstick on this big, ugly pig.
Second, many organizations have not applied thought to the question, “what value must sales contribute to our organization in order for us to meet our strategic objectives?" Yet, companies invest in recruiting, hiring, managing, training, and compensating their sales forces in spite of such vagueness, and without a coherent way to measure efficacy.
When I ask my clients what value their sales force must provide to their organization, the immediate answer I often hear is “revenue.” “OK,” I say, “but if there are no profits associated with the revenue, is that valuable?” My clients respond “Of course not, we must make a profit.” Taking this idea further, I ask “If you make a profit, but your customers aren’t satisfied with your product and wouldn’t recommend your company—is that valuable?” And the inevitable answer: “No, of course not.” Finally, I ask “What if your organization achieved profitable revenue targets, and had satisfied clients, but didn’t gain any market insight for future strategy—would that be valuable?” The answer: “No, our planners and strategists depend on our sales force to provide valuable feedback from the field!” Then the light bulb turns on: the sales force must deliver value beyond top-line revenue! Unfortunately, we’re stuck in a cycle of value-chain discord until organizations stop demanding multiple outcomes from their sales force, but understand only one dimension—revenue.
Happily, some organizations have taken important steps to break free from the revenue-at-all-cost myopia. One company I work with penalizes a salesperson if a customer has purchased its software, but does not use the capabilities the software provides. Why has the vendor taken this position when nearly all of its competitors are focused on pushing new licenses and version upgrades? Because their senior management recognizes that nothing puts a company’s logo into a customer’s budget-cutting crosshairs faster than a known wasted IT investment. Other examples abound in which organizations have taken a progressive stance on rewarding salespeople for activities that are valuable to the organization beyond revenue generation. Such changes are important because they serve as steps to mitigate the discord described in the DDI survey.
But if we can’t change the economic system, how can we find a better way for sellers and buyers interact?
Probably the more fundamental question is “do we need to find a better way?” Are you content with the status quo? The DDI survey clearly says buyers are not. Your answer likely depends on whether you view sales as necessary—or necessarily evil.
Given the billions of dollars that are spent annually on sales effectiveness training and CRM systems, this sentiment is an indictment on the sales profession, and it says we’re failing at our efforts to improve our face-to-face experiences with our customers. Not all is bad, however. Tremendous opportunities exist for enterprises that strategically change how their sales forces engage with customers.
Why do buyers have antipathy for sales people?
To answer this question, it’s necessary to look beyond salespeople themselves and to the culture and systems under which salespeople have worked for several generations. First, ever since sales became a distinct entity in commercial enterprises, the tactical objectives of the sales force have been dictated by corporate revenue goals. A closely-watched metric by investment analysts, revenue goals are developed in the board room, and trickle down to the individual sales representative through a sometimes-perverse and inherently flawed calculus, the end-point of which is called a quota. This all-important number represents the salesperson’s revenue commitment to the organization, and it carries ponderous weight. With revenue as the focal point of sales-performance discussions, quota over-achievement often means significant financial rewards; under-achievement compromises a salesperson’s ever-tenuous job stability.
As any quota-carrying salesperson or sales manager can attest, the assignment of sales quotas frequently involve rancorous negotiations. Some quotas are completely arbitrary, based on the direction fairy dust blows when it is thrown up in the air. Others are based on conditions that are outside of the salesperson’s control—market and economic forecasts, product and pricing forecasts, assumptions, and growth factors.
Quotas are half the story. The other half is how revenue is credited against sales quotas. This exercise often results in a smoke-and-mirrors game that is as much political as it is the application of accounting debits and credits. The result is an unwieldy multi-page document, sometimes called a Commission Plan, which can require a lawyer’s expertise to decipher for all the ambiguity. Such complexity prompted one Vice President of Sales at a company I worked for to envision a commission plan that could fit on one side of a business card—a noble goal he never implemented.
So every day under this basic system of illogical quota calculation and revenue accrual, legions of salespeople engage with millions of customers worldwide. Lost in all the shouting and confusion are the answers to these questions: “What is valuable to the people and organizations that use our products?” And the corollary question, “How will our salespeople behave given the financial “ecosystem” we have created?” No wonder so many buyers decry their sales experiences. Any moniker purporting “customer-centricity” only serves to put lipstick on this big, ugly pig.
Second, many organizations have not applied thought to the question, “what value must sales contribute to our organization in order for us to meet our strategic objectives?" Yet, companies invest in recruiting, hiring, managing, training, and compensating their sales forces in spite of such vagueness, and without a coherent way to measure efficacy.
When I ask my clients what value their sales force must provide to their organization, the immediate answer I often hear is “revenue.” “OK,” I say, “but if there are no profits associated with the revenue, is that valuable?” My clients respond “Of course not, we must make a profit.” Taking this idea further, I ask “If you make a profit, but your customers aren’t satisfied with your product and wouldn’t recommend your company—is that valuable?” And the inevitable answer: “No, of course not.” Finally, I ask “What if your organization achieved profitable revenue targets, and had satisfied clients, but didn’t gain any market insight for future strategy—would that be valuable?” The answer: “No, our planners and strategists depend on our sales force to provide valuable feedback from the field!” Then the light bulb turns on: the sales force must deliver value beyond top-line revenue! Unfortunately, we’re stuck in a cycle of value-chain discord until organizations stop demanding multiple outcomes from their sales force, but understand only one dimension—revenue.
Happily, some organizations have taken important steps to break free from the revenue-at-all-cost myopia. One company I work with penalizes a salesperson if a customer has purchased its software, but does not use the capabilities the software provides. Why has the vendor taken this position when nearly all of its competitors are focused on pushing new licenses and version upgrades? Because their senior management recognizes that nothing puts a company’s logo into a customer’s budget-cutting crosshairs faster than a known wasted IT investment. Other examples abound in which organizations have taken a progressive stance on rewarding salespeople for activities that are valuable to the organization beyond revenue generation. Such changes are important because they serve as steps to mitigate the discord described in the DDI survey.
But if we can’t change the economic system, how can we find a better way for sellers and buyers interact?
Probably the more fundamental question is “do we need to find a better way?” Are you content with the status quo? The DDI survey clearly says buyers are not. Your answer likely depends on whether you view sales as necessary—or necessarily evil.
Strategic Questions Will Uncover Strategic Opportunities
The late Peter Drucker said “true marketing starts out with the customer, his demographics, his realities, his needs, his values. It does not ask ‘what do we want to sell?’ It asks ‘what does the customer want to buy?’ So, why have so few people figured out how to routinely and systematically uncover this fundamental insight? And why do few senior managers pay more than lip service to encouraging or requiring their sales forces to discover the answer?
One reason is that in the quest to create a “sales-driven culture,” companies push muscular sales tactics that often subordinate the importance of questions. “ABC—Always Be Closing,” or “Show the ROI!” or “Go for a trial close after showing our key features,” are part of sales-process DNA. Does anyone remember this recommendation--“When you get the customer to answer ‘yes’ to three consecutive questions, ask for the order.” ? One sales training tape I heard ignored asking questions altogether, offering this nugget: “If the customer voices an objection, give them a ‘yes . . .but.. . .” (I am not making this up—and I’m sure the phonic similarity to “headbutt” is not just a coincidence!) These superficial tactics fall short by not embedding strategic discovery into the sales process.
What is strategic discovery? It’s the process of learning how an organization plans to create, monetize, and deliver its value. Why is strategic discovery a vital competency for sales forces? Because compared to operational problem solving, strategic collaboration tightly connects enterprises in a value chain. Those tight connections increase a vendor’s value and reduce selling risks. Why? Because strategic initiatives are mission-critical and are often less ephemeral than operational initiatives. When a salesperson says “my solution enables your strategy,” she has a competitive advantage over the salesperson who says “my solution provides the highest ROI (and/or lowest Total Cost of Ownership).” I know from numerous sales engagements I’ve managed that “high ROI” alone provides a wobbly sales-value foundation. (See my recent blog, A Sales Team Needs More Than "High ROI" and "Low TCO" To Compete and related article The Right Sales Questions Will Get the Right Answers.)
Strategic discovery doesn’t have to be difficult, but the process makes many salespeople uncomfortable. Strategy questions must uncover business and financial challenges. They examine forces that are outside of anyone’s direct control. Part of the discussion includes blurry concepts like risks and trade-offs. Few strategic questions can be answered with a simple ‘yes’ or ‘no.” And strategic plans aren’t guided by ordained roadmaps or prescriptive methodologies.
So, what are the steps that a Sales-Discovery Black Belt should follow?
1. Begin with a foundation of mutual trust. As Jim Collins said in the bestseller Good to Great, “create an environment where the truth is heard.” Prospective customers don’t spontaneously open up and provide meaningful and honest answers to questions. And if you wait until the second meeting to start thinking about how to cultivate trust, it’s probably too late. Mutual transparency of goals and objectives must characterize the business relationship from the beginning. The best book I have read on this topic, Mahan Khalsa’s Let's Get Real or Let's Not Play, provides an approach that is as eloquent as it is sensible: “The decision to trust doesn’t start inside (your prospect)—it starts inside of you. Intent is a choice, and your choice will have consequences. You will communicate your intent whether you want to or not . . . Based on your intent, people will decide to trust you or not.”
2. Ask the right questions. Here are some of my favorite strategy questions, culled from a list of hundreds I’ve compiled over many years:
What are the key capabilities and resources required to execute strategy and achieve your goals?
In order to execute your business strategy, what are the key things you must do well?
What proprietary advantages must your company create for your strategy to be successful?
What are the most valuable outcomes your organization enables for your customers?
What are the major forces driving changes in your business?
What conditions have the most disruptive impact on your business now, and will have in the future?
What are the greatest opportunities for your company to change the basis of competition in your industry? How might these impact barriers to entry? Switching costs? Relationships in your value chain? Product differentiation?
How sustainable is your market position and the business model needed to achieve and support that position?
What are your options for growing your business in the future?
3. Identify capability gaps. Specific operational questions will uncover gaps between strategic imperatives and current capabilities. For example, the question “What are the major forces driving changes in your business?” might yield that global competition is a condition of growing importance. If the prospect company lacks operational capabilities to manage a worldwide supply chain, a strategically-significant impediment has been identified. From this finding, the essential work of sales takes place—enabling a client first to believe the facts about an issue—then to care, then to act. Operational questions are instrumental for crossing the belief threshold, so caring and acting are more likely because of the strategic ramifications of the capability gap.
4. Align the gaps with a recommended solution. This final step ensures that the recommended solution matches the client’s strategic imperative. A scenario from my sales past illustrates the importance of this step. Several years ago, one prospective client told me “Our goal is to get our organization 100% on bar coding by the end of next year.” Although I was pleased he believed in my product, I cringed at his remark, wondering how he would handle the Q&A from his management peers at his next planning meeting. The strategic goal was to improve cash flow by cutting order cycle time. Bar coding was one enabler. By establishing a foundation of trust described in Step 1, my commitment was to help my client achieve that outcome.
Achieving the right sales outcome--my client's success--required both my client and me to keep the strategic objective in focus.
One reason is that in the quest to create a “sales-driven culture,” companies push muscular sales tactics that often subordinate the importance of questions. “ABC—Always Be Closing,” or “Show the ROI!” or “Go for a trial close after showing our key features,” are part of sales-process DNA. Does anyone remember this recommendation--“When you get the customer to answer ‘yes’ to three consecutive questions, ask for the order.” ? One sales training tape I heard ignored asking questions altogether, offering this nugget: “If the customer voices an objection, give them a ‘yes . . .but.. . .” (I am not making this up—and I’m sure the phonic similarity to “headbutt” is not just a coincidence!) These superficial tactics fall short by not embedding strategic discovery into the sales process.
What is strategic discovery? It’s the process of learning how an organization plans to create, monetize, and deliver its value. Why is strategic discovery a vital competency for sales forces? Because compared to operational problem solving, strategic collaboration tightly connects enterprises in a value chain. Those tight connections increase a vendor’s value and reduce selling risks. Why? Because strategic initiatives are mission-critical and are often less ephemeral than operational initiatives. When a salesperson says “my solution enables your strategy,” she has a competitive advantage over the salesperson who says “my solution provides the highest ROI (and/or lowest Total Cost of Ownership).” I know from numerous sales engagements I’ve managed that “high ROI” alone provides a wobbly sales-value foundation. (See my recent blog, A Sales Team Needs More Than "High ROI" and "Low TCO" To Compete and related article The Right Sales Questions Will Get the Right Answers.)
Strategic discovery doesn’t have to be difficult, but the process makes many salespeople uncomfortable. Strategy questions must uncover business and financial challenges. They examine forces that are outside of anyone’s direct control. Part of the discussion includes blurry concepts like risks and trade-offs. Few strategic questions can be answered with a simple ‘yes’ or ‘no.” And strategic plans aren’t guided by ordained roadmaps or prescriptive methodologies.
So, what are the steps that a Sales-Discovery Black Belt should follow?
1. Begin with a foundation of mutual trust. As Jim Collins said in the bestseller Good to Great, “create an environment where the truth is heard.” Prospective customers don’t spontaneously open up and provide meaningful and honest answers to questions. And if you wait until the second meeting to start thinking about how to cultivate trust, it’s probably too late. Mutual transparency of goals and objectives must characterize the business relationship from the beginning. The best book I have read on this topic, Mahan Khalsa’s Let's Get Real or Let's Not Play, provides an approach that is as eloquent as it is sensible: “The decision to trust doesn’t start inside (your prospect)—it starts inside of you. Intent is a choice, and your choice will have consequences. You will communicate your intent whether you want to or not . . . Based on your intent, people will decide to trust you or not.”
2. Ask the right questions. Here are some of my favorite strategy questions, culled from a list of hundreds I’ve compiled over many years:
What are the key capabilities and resources required to execute strategy and achieve your goals?
In order to execute your business strategy, what are the key things you must do well?
What proprietary advantages must your company create for your strategy to be successful?
What are the most valuable outcomes your organization enables for your customers?
What are the major forces driving changes in your business?
What conditions have the most disruptive impact on your business now, and will have in the future?
What are the greatest opportunities for your company to change the basis of competition in your industry? How might these impact barriers to entry? Switching costs? Relationships in your value chain? Product differentiation?
How sustainable is your market position and the business model needed to achieve and support that position?
What are your options for growing your business in the future?
3. Identify capability gaps. Specific operational questions will uncover gaps between strategic imperatives and current capabilities. For example, the question “What are the major forces driving changes in your business?” might yield that global competition is a condition of growing importance. If the prospect company lacks operational capabilities to manage a worldwide supply chain, a strategically-significant impediment has been identified. From this finding, the essential work of sales takes place—enabling a client first to believe the facts about an issue—then to care, then to act. Operational questions are instrumental for crossing the belief threshold, so caring and acting are more likely because of the strategic ramifications of the capability gap.
4. Align the gaps with a recommended solution. This final step ensures that the recommended solution matches the client’s strategic imperative. A scenario from my sales past illustrates the importance of this step. Several years ago, one prospective client told me “Our goal is to get our organization 100% on bar coding by the end of next year.” Although I was pleased he believed in my product, I cringed at his remark, wondering how he would handle the Q&A from his management peers at his next planning meeting. The strategic goal was to improve cash flow by cutting order cycle time. Bar coding was one enabler. By establishing a foundation of trust described in Step 1, my commitment was to help my client achieve that outcome.
Achieving the right sales outcome--my client's success--required both my client and me to keep the strategic objective in focus.
Honor Thy Customer Before He Leaves—Not After
In three years, I’ve never felt as loved as I do now by the cable service I just dropped, Cox Communications. Why? Because at the end of March, Verizon Fios will be the new communications provider at my home. And I feel heartsick for Cox—I’m not leaving Cox because I love Verizon more, but only because the Verizon package costs much, much less than my unbundled services.
Now the jilted Cox is communicating—with a vengeance. They have called me several times in the last two weeks to tell me how much they will miss my business. Today’s call was from Vivian “calling on behalf of Cox.” Picking up on her semantic hint, I asked her what company she was with. “Timberline,” she reported, and without pausing, she continued, “We understand you want to go with another provider, and we’re calling to offer you a discount on your cable service if you continue with Cox.”
The irony of all this was too much to bear, so I asked Vivian why Cox would wait until I’ve decided to terminate my service to have an outsourced salesperson call to tell me how much I’m appreciated by offering me a discount when they were perfectly happy to bill me at the premium rate up to this time. The unflappable Vivian didn’t have an answer for me, but she told me she noted my concern and she wished me a good day.
I was disappointed that Vivian couldn’t shed light on my question. I realize that logic often gets in my way. Is there anyone who can help me understand why Cox might wait until a customer has decided to leave to apply significant resources toward customer retention, rather than loving a customer while he or she is a customer? Is there a compelling conversion factor or KPI that I’m unaware of that makes Cox’s late plea economically astute?
In the end, it seems sad that Cox has such poor Customer Relationship Management execution that it could only muster a price-play on this “hail Mary” telemarketing call. Cox’s customers deserve better—and so does Vivian.
Now the jilted Cox is communicating—with a vengeance. They have called me several times in the last two weeks to tell me how much they will miss my business. Today’s call was from Vivian “calling on behalf of Cox.” Picking up on her semantic hint, I asked her what company she was with. “Timberline,” she reported, and without pausing, she continued, “We understand you want to go with another provider, and we’re calling to offer you a discount on your cable service if you continue with Cox.”
The irony of all this was too much to bear, so I asked Vivian why Cox would wait until I’ve decided to terminate my service to have an outsourced salesperson call to tell me how much I’m appreciated by offering me a discount when they were perfectly happy to bill me at the premium rate up to this time. The unflappable Vivian didn’t have an answer for me, but she told me she noted my concern and she wished me a good day.
I was disappointed that Vivian couldn’t shed light on my question. I realize that logic often gets in my way. Is there anyone who can help me understand why Cox might wait until a customer has decided to leave to apply significant resources toward customer retention, rather than loving a customer while he or she is a customer? Is there a compelling conversion factor or KPI that I’m unaware of that makes Cox’s late plea economically astute?
In the end, it seems sad that Cox has such poor Customer Relationship Management execution that it could only muster a price-play on this “hail Mary” telemarketing call. Cox’s customers deserve better—and so does Vivian.
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