Yesterday I received a sales letter that hit me like a breath of fresh, un-digitized air. I wanted to share it with my readers:
Dear Friend:
As we enter the new year, conditions are not very good for purchasing new supplies and equipment. However, there are some signs that this may improve as the year progresses.
Your responsibility as a department manager or property manager is to maintain your facilities in the best possible manner. I have three things to offer:
Excellent products
Good service
Fair prices
If the need arises this year for you to replace or add to your equipment, please don’t hesitate to give me a call. I will be happy to furnish you catalogs and written quotations for your consideration.
Sincerely,
My friend Stanley’s name follows below his hand-written signature.
Three paragraphs, two sentences each. There’s purity of form and a sincerity that rarely emanates from today’s marketing communications.
Stanley began his sales career before most of us were born, and he hopes to achieve the milestone of entering his ninth decade this year. He’s a retired CEO who is passionate about selling. He’s never stopped. When he started working, ‘personal selling’ meant . . . personal selling. Telephones, “snail mail,” and cars were the tools of the sales trade. Most of all, face-to-face dialogs created the trusted bonds between buyer and seller, and were an inextricable part of the sales process. Little wonder that Stanley’s letter says “I care” so clearly, without using those two words. He perfected that skill in the trenches, by looking at his customer in the eye.
In our Twittered, Blogged, and Web 2.0’d sales world, Stanley’s selling talent has become rare. The forces of information technology, product commoditization, and cost reduction have pushed legions of salespeople from the prospect’s office to the deep innards of the call-center cube farm. Millions must make their quotas using far more sophisticated tools than Stanley had—but without ever physically shaking hands with a customer.
As Stanley approaches his 80th birthday, he has become rare in other ways as well. He’s part of a shrinking population that will all but vanish in twenty years: a self-selected group of senior citizens that choose not to use a computer. He doesn’t use email or a have website for his company. He puts up with my e-marketing hubris when I rib him about not being able to accept orders online (FAX and phone work fine for him). The few times he needs Internet access, he taps an eager pool of knowledgeable grandchildren. It would be easy to dismiss his knowledge as outdated.
But the wisdom contained in his letter reminds me that when it comes to selling, seniors have a wealth of knowledge for the rest of us. Stanley has taught me how courtesy, respect, and sincerity have great power in sales. I wish Stanley many more great years in selling. I still have much to learn from him.
Friday, January 30, 2009
Friday, January 23, 2009
Money is Tight. Where's the Biggest Customer Experience Bang for the Buck?
By Andrew Rudin, Outside Technologies, Inc.
The VP of Sales at a software company I worked for frequently chided his sales force not to boast to prospects about recent wins. "Customers are always unhappy within the first 90 days of an install."
He was right in one way: our customers were invariably disappointed early. But he was wrong in accepting customer rancor as inevitable, and his myopia cost his sales force and the company substantial revenue. What was the company's strategic CRM blunder? I'll describe that in a moment.
If you graph customer expectations over time, one inarguable high point comes immediately following the sale. Why? Because salespeople have an understandable tendency to over-promise results, especially when quotas--and jobs--are on the line (been there, done that). On the customer side, harsh spotlights turn on the decision makers as anxious colleagues look for quick, tangible improvements, or detractors salivate for opportunities to say "I had serious doubts about the vendor choice." Meanwhile, the decision makers seek validation for why they made the best decision from a pool of qualified competitors. Word-of-mouth is in hyper-drive. My experience has been that a significant number of queries are exchanged immediately post-sale (Although I haven't taken formal measurements, I'm interested in learning if anyone has).
If there's ever a time you need to love your customer, it's right after you first shake hands when referring to your prospect as customer. Hugs all around--for 90 days! What better time to provide the decision makers with every reason that he or she made the best choice?
What did my employer do? Management scrutinized departmental financial performance for every part of the delivery, and customer satisfaction measurements were omitted from the equation. What did that mean? Revenue was split between departments: custom development, warranty support, packaged application sales, installation and training, and product management. Expenses were measured down to the penny. From a customer perspective, support was grudgingly parsed. Meters were ticking for every direct customer interaction--and behind the scenes as well--because no department wanted to "eat an expense," an expression that became well-worn at internal client meetings.
What dynamic does this problem create for a sales organization? Notwithstanding the incredible amount of time a salesperson must spend responding to calls and emails that open with "Before we bought this, you told me . . , " consistent service breakdowns destroy credibility. When that happens, sales don't repeat easily, and cannot scale--two must have's for growth-oriented strategies.
What should my company have done? Hindsight offers vivid clarity. A management planning horizon that extended beyond the current quarter would have helped. A business strategy that included in its financial calculus the lifetime value of the customer would have made general ledger expense silos less dysfunctional. At the very least, internal bickering would have been minimized as managers strategized how to create value for customers as well as themselves.
Business strategies have the best opportunity to work when a customer says "I made best choice given what I knew at the time, and if I had to make my choice again, I'd do the same thing."
The VP of Sales at a software company I worked for frequently chided his sales force not to boast to prospects about recent wins. "Customers are always unhappy within the first 90 days of an install."
He was right in one way: our customers were invariably disappointed early. But he was wrong in accepting customer rancor as inevitable, and his myopia cost his sales force and the company substantial revenue. What was the company's strategic CRM blunder? I'll describe that in a moment.
If you graph customer expectations over time, one inarguable high point comes immediately following the sale. Why? Because salespeople have an understandable tendency to over-promise results, especially when quotas--and jobs--are on the line (been there, done that). On the customer side, harsh spotlights turn on the decision makers as anxious colleagues look for quick, tangible improvements, or detractors salivate for opportunities to say "I had serious doubts about the vendor choice." Meanwhile, the decision makers seek validation for why they made the best decision from a pool of qualified competitors. Word-of-mouth is in hyper-drive. My experience has been that a significant number of queries are exchanged immediately post-sale (Although I haven't taken formal measurements, I'm interested in learning if anyone has).
If there's ever a time you need to love your customer, it's right after you first shake hands when referring to your prospect as customer. Hugs all around--for 90 days! What better time to provide the decision makers with every reason that he or she made the best choice?
What did my employer do? Management scrutinized departmental financial performance for every part of the delivery, and customer satisfaction measurements were omitted from the equation. What did that mean? Revenue was split between departments: custom development, warranty support, packaged application sales, installation and training, and product management. Expenses were measured down to the penny. From a customer perspective, support was grudgingly parsed. Meters were ticking for every direct customer interaction--and behind the scenes as well--because no department wanted to "eat an expense," an expression that became well-worn at internal client meetings.
What dynamic does this problem create for a sales organization? Notwithstanding the incredible amount of time a salesperson must spend responding to calls and emails that open with "Before we bought this, you told me . . , " consistent service breakdowns destroy credibility. When that happens, sales don't repeat easily, and cannot scale--two must have's for growth-oriented strategies.
What should my company have done? Hindsight offers vivid clarity. A management planning horizon that extended beyond the current quarter would have helped. A business strategy that included in its financial calculus the lifetime value of the customer would have made general ledger expense silos less dysfunctional. At the very least, internal bickering would have been minimized as managers strategized how to create value for customers as well as themselves.
Business strategies have the best opportunity to work when a customer says "I made best choice given what I knew at the time, and if I had to make my choice again, I'd do the same thing."
Wednesday, January 7, 2009
Look Both Ways Before Making 2009's Sales Resolutions!
In the past, making resolutions was a challenge that was easy for me to delay. After January 1, the world kept moving and I moved with it--resolution ready or not! But so much changed in 2008 that I felt a steadying resolution or two might help. So I grouped my 2009 sales resolutions into two Janusian groups (owing its name to the Roman god of gates and doors, Janus, whose vigil required him to look in two directions):
Things to continue doing
Things to do differently
Things to start doing
Things to stop doing
Before January’s calendar rolls into double-digit days, I wanted to share my list for my clients and other enterprises:
Things to continue doing (for some people, after 2008, this might be the shortest of the four lists!):
1. Setting strategic goals that push the envelope (sometimes called BHAG’s—Big Hairy Audacious Goals).
2. Exploiting social media communication to achieve corporate strategies.
Things to do differently:
1. Develop not just many social media connections, but those that provide the highest value to enterprises: innovation, revenue achievement, and knowledge for process best practices.
2. Reorganize marketing and selling processes to address redistribution of information power and changes in how people buy.
3. Trust, but more skeptically. As author David Berreby said, when writing about trust in the New York Times(March 30, 2008), Stanley Milgram’s famed electric shock experiments show “in difficult situations, when (people) wrestle with the line between trust and skepticism, trust often wins. Much of the time, that’s a good thing.” The aftermath of Bernie Madoff’s scheme suggests differently.
Things to start doing:
1. Ask a teenager for ongoing, in-depth tutorials about how to use Facebook, Twitter, instant messaging, and other social media tools (if you haven’t already done so).
2. Seek opinions from people, books and blogs that are controversial or even disagreeable.
Things to stop doing:
1. Flogging the sales force for more productivity and more revenue output without providing better tools, training, or process improvements.
2. Delaying strategy decision making “until we know what the economy is going to do.” The forces in world keep moving. Could the risks of indecision be greater than the risks from a wrong decision?
What’s on your list?
Things to continue doing
Things to do differently
Things to start doing
Things to stop doing
Before January’s calendar rolls into double-digit days, I wanted to share my list for my clients and other enterprises:
Things to continue doing (for some people, after 2008, this might be the shortest of the four lists!):
1. Setting strategic goals that push the envelope (sometimes called BHAG’s—Big Hairy Audacious Goals).
2. Exploiting social media communication to achieve corporate strategies.
Things to do differently:
1. Develop not just many social media connections, but those that provide the highest value to enterprises: innovation, revenue achievement, and knowledge for process best practices.
2. Reorganize marketing and selling processes to address redistribution of information power and changes in how people buy.
3. Trust, but more skeptically. As author David Berreby said, when writing about trust in the New York Times(March 30, 2008), Stanley Milgram’s famed electric shock experiments show “in difficult situations, when (people) wrestle with the line between trust and skepticism, trust often wins. Much of the time, that’s a good thing.” The aftermath of Bernie Madoff’s scheme suggests differently.
Things to start doing:
1. Ask a teenager for ongoing, in-depth tutorials about how to use Facebook, Twitter, instant messaging, and other social media tools (if you haven’t already done so).
2. Seek opinions from people, books and blogs that are controversial or even disagreeable.
Things to stop doing:
1. Flogging the sales force for more productivity and more revenue output without providing better tools, training, or process improvements.
2. Delaying strategy decision making “until we know what the economy is going to do.” The forces in world keep moving. Could the risks of indecision be greater than the risks from a wrong decision?
What’s on your list?
Tuesday, January 6, 2009
Why Sears Customers Continue To Suffer
(first published March, 2007)
Sears--the retailing powerhouse that broke down paradigms for how consumers purchase hardgoods hasn't figured out how to maintain their visionary edge. Many would argue that they lost it many years ago. Today they are the poster child of companies that say--no, shout--to their customers: "We're happy to take your money. After that, we don't care."
Here's the evidence: last August, we purchased a relatively inexpensive refrigerator to replace our failing 15-year-old unit, which had been housed in our garage. We found it on the Sears website and engaged in a conversation to clarify a few questions with Sears customer service before placing the order. At the appointed time, two men in a Sears delivery truck arrived and, delighted that this stop didn't involve taking the new refrigerator around the back and up 4 flights of stairs, happily placed the new unit in the spot in the garage location formerly occupied by the old one. They thanked me for the order, took our old refrigerator, and drove off less than 15 minutes after they arrived. I paid about $20 for this service, which was fine.
The refrigerator worked well until this winter, when the freezer mysteriously stopped keeping our frozen food frozen. The refrigerator was still under warranty, so I contacted the service number printed on the manual. After over 90 minutes of phone hold "press 1, press 2, press 3" agony, I persevered and spoke to a customer service representative who blandly asked me to open my manual and to read some text embedded on a paragraph on page 12 that indicated my refrigerator was not built for use outside of the temperature confines of a typical American home. Therefore, garage and back porch installers need not apply! I informed him that this information was not shared with me--not by the Sears website (which didn't state "Not designed to be installed in unheated areas in colder climates), not by the order desk personnel I spoke with before ordering (I told the representative the unit would be installed in my garage), and not by the delivery crew (who PUT it in the garage)--and I also told him that Virginia, in fact, experiences freezing weather in the winter. He further impugned Sears by saying that this issue comes up all the time. "So why doesn't the website provide the appropriate information?" I asked. "I guess nobody outside of tech support really knows this," he responded. At this point, I asked him what is the process for resolving this problem resulting from what I felt was an irresponsible omission of key product information--times 3! He said they would have to send a service tech to my home to see if it could be fixed. "FIXED--How? you just told me it won't work, according to page 12! What is your service tech going to do or tell me that you haven't done already?" He responded that that is his process and he's sticking to it.
A few days later, according to Sears Plan, I received a friendly automated recording from Sears informing me that a service tech would arrive at my home the following Saturday--somewhere between 8 am and 5 pm. Not being exactly overjoyed at the prospect of spending the entire day at home further contaminated what little expectation I had of achieving any positive result from this "process." I called Sears back and firmly committed that I would make no commitments to staying at home all day on a Saturday (did Sears think I had nothing else to do?). In fact, a service tech did show up when I wasn't at home. Little wonder. A few days later, exactly according to the Sears "process" script, another friendly recording arrived in my voicemail inbox, offering another window of opportunity for a service call--this time during the week between 8 and 12, which I accepted.
On the scheduled day, a friendly, but jaded, service tech arrived and confirmed what I already knew: the compressor on the freezer wasn't designed to operate in temperatures below 50 degrees. "I'll write this up in a case and let them know what I found. At this point, there's nothing I can do." Who is "them?" I asked. He said the store manager at our local Sears. "But I purchased this online," I said. No matter, he told me--the local store would have to resolve my issue. "I see this all the time," he said. "I don't know why they they sell these and install them in this climate. They should know better. So many people buy these in the summer and they are happy. Then winter hits and they don't know what happened. I see it all the time." All this information about how preventable this misfire was didn't leave me with a warm feeling.
Contributing to the evidence of how pervasive is the ineptitude at Sears is this fact: the refrigerator cost less than $450. Did it even occur to the product planners and buyers at Sears that such a low-price model might be utilized by someone in the United States as an auxiliary appliance, and therefore might be installed in a location other than a kitchen? Clearly, that question was never asked by people who should have asked it. (Although I sardonically envision a lowly Sears intern voicing concern, but quickly dropping the idea after withering in the conference room before the pompous glares of his superiors.) Like most systemic customer support problems, the organizational partitions that managers faithfully create lose their utility when the challenge becomes "how do we demonstrate to our customers that they matter to us?"
After 3 weeks,I haven't had time to contact Sears to figure out what to do about the appliance they so flagrantly misrepresented. And as for the Sears resolution "process:" No follow up call from Sears, no resolution, no anything. Maybe they'll give me another automated call--this time with a synthesized voice saying "Hi! This is Sears! We just want to let you know we care. Goodbye."
It's still winter in Virginia, and all of my outdoor freezer stuff is in my indoor freezer so it won't spoil. I can't wait till the weather turns warm so that my freezer will work again. Then I'll call Sears to let them know--in the vain hope that someone cares.
Clearly Sears is adept at completing the sales transaction: my credit card payment and delivery order were processed quickly and efficiently. They still haven't figured out how to make the customer experience satisfactory. It's the last product I'll ever buy from them. Oh, and that includes Land's End, too! I can't wait to show my friends how well my Sears refrigerator works! Maybe I'll spoil some sales to go along with my spoiled food!
Sears--the retailing powerhouse that broke down paradigms for how consumers purchase hardgoods hasn't figured out how to maintain their visionary edge. Many would argue that they lost it many years ago. Today they are the poster child of companies that say--no, shout--to their customers: "We're happy to take your money. After that, we don't care."
Here's the evidence: last August, we purchased a relatively inexpensive refrigerator to replace our failing 15-year-old unit, which had been housed in our garage. We found it on the Sears website and engaged in a conversation to clarify a few questions with Sears customer service before placing the order. At the appointed time, two men in a Sears delivery truck arrived and, delighted that this stop didn't involve taking the new refrigerator around the back and up 4 flights of stairs, happily placed the new unit in the spot in the garage location formerly occupied by the old one. They thanked me for the order, took our old refrigerator, and drove off less than 15 minutes after they arrived. I paid about $20 for this service, which was fine.
The refrigerator worked well until this winter, when the freezer mysteriously stopped keeping our frozen food frozen. The refrigerator was still under warranty, so I contacted the service number printed on the manual. After over 90 minutes of phone hold "press 1, press 2, press 3" agony, I persevered and spoke to a customer service representative who blandly asked me to open my manual and to read some text embedded on a paragraph on page 12 that indicated my refrigerator was not built for use outside of the temperature confines of a typical American home. Therefore, garage and back porch installers need not apply! I informed him that this information was not shared with me--not by the Sears website (which didn't state "Not designed to be installed in unheated areas in colder climates), not by the order desk personnel I spoke with before ordering (I told the representative the unit would be installed in my garage), and not by the delivery crew (who PUT it in the garage)--and I also told him that Virginia, in fact, experiences freezing weather in the winter. He further impugned Sears by saying that this issue comes up all the time. "So why doesn't the website provide the appropriate information?" I asked. "I guess nobody outside of tech support really knows this," he responded. At this point, I asked him what is the process for resolving this problem resulting from what I felt was an irresponsible omission of key product information--times 3! He said they would have to send a service tech to my home to see if it could be fixed. "FIXED--How? you just told me it won't work, according to page 12! What is your service tech going to do or tell me that you haven't done already?" He responded that that is his process and he's sticking to it.
A few days later, according to Sears Plan, I received a friendly automated recording from Sears informing me that a service tech would arrive at my home the following Saturday--somewhere between 8 am and 5 pm. Not being exactly overjoyed at the prospect of spending the entire day at home further contaminated what little expectation I had of achieving any positive result from this "process." I called Sears back and firmly committed that I would make no commitments to staying at home all day on a Saturday (did Sears think I had nothing else to do?). In fact, a service tech did show up when I wasn't at home. Little wonder. A few days later, exactly according to the Sears "process" script, another friendly recording arrived in my voicemail inbox, offering another window of opportunity for a service call--this time during the week between 8 and 12, which I accepted.
On the scheduled day, a friendly, but jaded, service tech arrived and confirmed what I already knew: the compressor on the freezer wasn't designed to operate in temperatures below 50 degrees. "I'll write this up in a case and let them know what I found. At this point, there's nothing I can do." Who is "them?" I asked. He said the store manager at our local Sears. "But I purchased this online," I said. No matter, he told me--the local store would have to resolve my issue. "I see this all the time," he said. "I don't know why they they sell these and install them in this climate. They should know better. So many people buy these in the summer and they are happy. Then winter hits and they don't know what happened. I see it all the time." All this information about how preventable this misfire was didn't leave me with a warm feeling.
Contributing to the evidence of how pervasive is the ineptitude at Sears is this fact: the refrigerator cost less than $450. Did it even occur to the product planners and buyers at Sears that such a low-price model might be utilized by someone in the United States as an auxiliary appliance, and therefore might be installed in a location other than a kitchen? Clearly, that question was never asked by people who should have asked it. (Although I sardonically envision a lowly Sears intern voicing concern, but quickly dropping the idea after withering in the conference room before the pompous glares of his superiors.) Like most systemic customer support problems, the organizational partitions that managers faithfully create lose their utility when the challenge becomes "how do we demonstrate to our customers that they matter to us?"
After 3 weeks,I haven't had time to contact Sears to figure out what to do about the appliance they so flagrantly misrepresented. And as for the Sears resolution "process:" No follow up call from Sears, no resolution, no anything. Maybe they'll give me another automated call--this time with a synthesized voice saying "Hi! This is Sears! We just want to let you know we care. Goodbye."
It's still winter in Virginia, and all of my outdoor freezer stuff is in my indoor freezer so it won't spoil. I can't wait till the weather turns warm so that my freezer will work again. Then I'll call Sears to let them know--in the vain hope that someone cares.
Clearly Sears is adept at completing the sales transaction: my credit card payment and delivery order were processed quickly and efficiently. They still haven't figured out how to make the customer experience satisfactory. It's the last product I'll ever buy from them. Oh, and that includes Land's End, too! I can't wait to show my friends how well my Sears refrigerator works! Maybe I'll spoil some sales to go along with my spoiled food!
"On My Honor, as a Salesperson . . .": Why Sales Ethics Matter
(first published April, 2007)
Which business risk represents the greatest threat to shareholder value? Natural disasters? Terrorism? Product defects? Piracy? Patent infringement? Lack of ethical boundaries?
If you answered anything but the last choice, think again. The massive collapse of market capitalization at Tyco, Worldcom, and Enron underscores the grave dangers posed to shareholder value when employees lack an ethical compass. The cumulative decline in market capitalization resulting from fraud at these three companies was $136 billion, according to Public Citizen's Congress Watch.
These scandals originated in the executive suite and required an ecosystem of compliant people to execute. What about ethical problems that originate elsewhere? What happens when ethical violations spiral from what are euphemistically called "aggressive sales practices?" In 1998, ethical violations at Prudential Insurance became so pervasive that the company's management eventually estimated its liability from the pending class-action lawsuit at $2 billion. Among the voluminous courtroom testimony from the case was this nugget: "Your judgment gets clouded out in the field when you are pressured to sell, sell, sell."
Could ethical problems affect your company? No company is immune. How might your company's reputation or your personal reputation be affected? How real are the ethical risks you face, and what, if anything, should you do about them? These are risk-related questions that one company should have asked—but didn't. As a result, the indiscretions of a person I'll call Travis Doe cost MegaCorp (not the company's real name) more than $1 million.
Travis Doe was a reseller account manager for MegaCorp. He was affable and gregarious, and his compensation plan enabled him to earn a comfortable six-figure package. But Travis had a revenue scheme that would make his day-job earnings pale in comparison, and it paid him very well—before he was caught. When the dust began to settle a year later, the total estimated cost to MegaCorp was more than $1 million. That's before adding the 40 percent revenue loss of the diverted direct sales. What about the greater cost of diminished employee morale and broken customer trust?
The loss was buried in the income statement of MegaCorp's financial report, away from the eyes of investors. No mainstream publication or trade journal carried the story. What was Travis's scheme? I'll get to that in a moment.
Unethical
Any discussion of ethics involves drawing boundaries. But drawing boundaries for sales ethics is much easier said than done:
"I'll sell an early version of my software that isn't fully tested, but I won't sell anything that I know doesn't work."
"I won't bring up the fact that I'm missing a key feature, but I won't lie about its absence."
"At the end of the quarter, I will commit resources I don't control so I can win the sale, but I won't promise my prospective customer anything I know cannot be delivered."
I won't overcharge anyone, but I won't sell at the lowest possible price, either."
I'll look out for my client's best interests but only if doing so doesn't jeopardize my business."
As author David Quammen writes in Wild Thoughts From Wild Places (Scribner, 1998), "Not every crisp line represents a triumph of ethical clarity." What causes this obfuscation? Individual ethical interpretations are a function of a person's current emotions, situation, values, experience, logic and personality. What do blurry interpretive boundaries mean for sales? They mean that ethical practices and behaviors are difficult to define.
Travis's plan
Travis executed his plan by setting up a bogus reseller account. When prospective clients sent requests for quotes, Travis sent the requests to his bogus company instead of sending them to a legitimate reseller. Because the bogus reseller purchased from MegaCorp at a 40 percent discount, Travis made a significant profit on every order his bogus company processed. Only when an order administrator on the West Coast spotted a benign part number anomaly did Travis's ruse begin to unravel. She phoned the "reseller" with a question, and the person who answered stated that "our vice president, Travis Doe, will contact you tomorrow with an answer." The order administrator blew the whistle. An embarrassed MegaCorp quietly fired him about a week later.
The evidence on the laptop exposed how far the ripples from the scam had traveled. There were copies of letters and proposals bearing the name, "Travis Doe, Vice President," on fake letterhead. Under the guise of a legitimate reseller, Travis had created price lists, spreadsheets that tracked the status of quotes, customer lists, marketing material and more.
Surprised colleagues (and some not-so-surprised) came forward to describe how Travis had pressured them to send orders to his bogus reseller rather than place them directly with their employer. Betrayed customers who had unwittingly placed orders with the reseller loudly expressed their woes because Travis's company had no capabilities to support them. Legitimate resellers were particularly irate because they had been deprived of valuable orders.
No one else was terminated, but except for the alert order administrator, Travis's indiscretion created no winners. Where were the boundaries of ethical responsibility? MegaCorp utterly failed by not having adequate controls to prevent Travis's scheme. If Travis's immediate boss knew about his dishonesty, why didn't he stop him? If he didn't know, why not? You know it's a bad day at the office when any answer you provide isn't a good one.
Ethical risk presents vexing challenges for organizations because ethical standards must first be defined, then documented, communicated and followed. In addition, the subjectivity of what constitutes good ethics, and resulting interpretive challenges, defy standard-setting. Senior managers should not avoid this problem. Instead, they should embrace it by creating an environment for open, candid discussion about ethical challenges that will encourage salespeople, and those who support their efforts, to identify issues and confront them before they spiral out of control.
Establishing an ethical culture requires strong leadership; expectations for ethical behavior must be visible and consistent throughout the enterprise. Similar to many operational risks, the likelihood of ethics problems is magnified when multiple risk conditions coexist. When high financial incentives for dishonesty, lax audit controls and non-integrated processes exist simultaneously in an organization, a shrill alarm should sound in the boardroom or executive suite indicating a condition ripe for exploitation. Ethical lapses can irreparably undermine the best business plans, corporate reputations, and brand building. There are too many opportunistic Travises in the world, and too much value at risk, to ignore the alert.
© 2007 Andrew Rudin
Which business risk represents the greatest threat to shareholder value? Natural disasters? Terrorism? Product defects? Piracy? Patent infringement? Lack of ethical boundaries?
If you answered anything but the last choice, think again. The massive collapse of market capitalization at Tyco, Worldcom, and Enron underscores the grave dangers posed to shareholder value when employees lack an ethical compass. The cumulative decline in market capitalization resulting from fraud at these three companies was $136 billion, according to Public Citizen's Congress Watch.
These scandals originated in the executive suite and required an ecosystem of compliant people to execute. What about ethical problems that originate elsewhere? What happens when ethical violations spiral from what are euphemistically called "aggressive sales practices?" In 1998, ethical violations at Prudential Insurance became so pervasive that the company's management eventually estimated its liability from the pending class-action lawsuit at $2 billion. Among the voluminous courtroom testimony from the case was this nugget: "Your judgment gets clouded out in the field when you are pressured to sell, sell, sell."
Could ethical problems affect your company? No company is immune. How might your company's reputation or your personal reputation be affected? How real are the ethical risks you face, and what, if anything, should you do about them? These are risk-related questions that one company should have asked—but didn't. As a result, the indiscretions of a person I'll call Travis Doe cost MegaCorp (not the company's real name) more than $1 million.
Travis Doe was a reseller account manager for MegaCorp. He was affable and gregarious, and his compensation plan enabled him to earn a comfortable six-figure package. But Travis had a revenue scheme that would make his day-job earnings pale in comparison, and it paid him very well—before he was caught. When the dust began to settle a year later, the total estimated cost to MegaCorp was more than $1 million. That's before adding the 40 percent revenue loss of the diverted direct sales. What about the greater cost of diminished employee morale and broken customer trust?
The loss was buried in the income statement of MegaCorp's financial report, away from the eyes of investors. No mainstream publication or trade journal carried the story. What was Travis's scheme? I'll get to that in a moment.
Unethical
Any discussion of ethics involves drawing boundaries. But drawing boundaries for sales ethics is much easier said than done:
"I'll sell an early version of my software that isn't fully tested, but I won't sell anything that I know doesn't work."
"I won't bring up the fact that I'm missing a key feature, but I won't lie about its absence."
"At the end of the quarter, I will commit resources I don't control so I can win the sale, but I won't promise my prospective customer anything I know cannot be delivered."
I won't overcharge anyone, but I won't sell at the lowest possible price, either."
I'll look out for my client's best interests but only if doing so doesn't jeopardize my business."
As author David Quammen writes in Wild Thoughts From Wild Places (Scribner, 1998), "Not every crisp line represents a triumph of ethical clarity." What causes this obfuscation? Individual ethical interpretations are a function of a person's current emotions, situation, values, experience, logic and personality. What do blurry interpretive boundaries mean for sales? They mean that ethical practices and behaviors are difficult to define.
Travis's plan
Travis executed his plan by setting up a bogus reseller account. When prospective clients sent requests for quotes, Travis sent the requests to his bogus company instead of sending them to a legitimate reseller. Because the bogus reseller purchased from MegaCorp at a 40 percent discount, Travis made a significant profit on every order his bogus company processed. Only when an order administrator on the West Coast spotted a benign part number anomaly did Travis's ruse begin to unravel. She phoned the "reseller" with a question, and the person who answered stated that "our vice president, Travis Doe, will contact you tomorrow with an answer." The order administrator blew the whistle. An embarrassed MegaCorp quietly fired him about a week later.
The evidence on the laptop exposed how far the ripples from the scam had traveled. There were copies of letters and proposals bearing the name, "Travis Doe, Vice President," on fake letterhead. Under the guise of a legitimate reseller, Travis had created price lists, spreadsheets that tracked the status of quotes, customer lists, marketing material and more.
Surprised colleagues (and some not-so-surprised) came forward to describe how Travis had pressured them to send orders to his bogus reseller rather than place them directly with their employer. Betrayed customers who had unwittingly placed orders with the reseller loudly expressed their woes because Travis's company had no capabilities to support them. Legitimate resellers were particularly irate because they had been deprived of valuable orders.
No one else was terminated, but except for the alert order administrator, Travis's indiscretion created no winners. Where were the boundaries of ethical responsibility? MegaCorp utterly failed by not having adequate controls to prevent Travis's scheme. If Travis's immediate boss knew about his dishonesty, why didn't he stop him? If he didn't know, why not? You know it's a bad day at the office when any answer you provide isn't a good one.
Ethical risk presents vexing challenges for organizations because ethical standards must first be defined, then documented, communicated and followed. In addition, the subjectivity of what constitutes good ethics, and resulting interpretive challenges, defy standard-setting. Senior managers should not avoid this problem. Instead, they should embrace it by creating an environment for open, candid discussion about ethical challenges that will encourage salespeople, and those who support their efforts, to identify issues and confront them before they spiral out of control.
Establishing an ethical culture requires strong leadership; expectations for ethical behavior must be visible and consistent throughout the enterprise. Similar to many operational risks, the likelihood of ethics problems is magnified when multiple risk conditions coexist. When high financial incentives for dishonesty, lax audit controls and non-integrated processes exist simultaneously in an organization, a shrill alarm should sound in the boardroom or executive suite indicating a condition ripe for exploitation. Ethical lapses can irreparably undermine the best business plans, corporate reputations, and brand building. There are too many opportunistic Travises in the world, and too much value at risk, to ignore the alert.
© 2007 Andrew Rudin
How Humor and Eavesdropping Combine To Win Sales
(first published October, 2007)
I was in midway through writing an article with the dour title "Prospecting Doesn't Matter" (owing to Nicholas Carr's 2003 Harvard Business Review article "IT Doesn't Matter") when I serendipitously uncovered something that debunked my premise--at least for now.
A New Jersey company, Hammerhead Advertising (www.hammerheadadvertising.com), has created a campaign for new business by combining time-worn voice mail technology with an edgy message. After listening to the six samples available on the company's website, I was stunned by the power of the deceptively simple--but wildly innovative--approach. What makes the messages so powerful? It's not what you might think. There's no "value message," no glowing customer references, no gratuitous branding. It exploits an unvarnished, visceral approach that combines subtle humor with voyeurism.
The messages are delivered to the voice mailbox of the intended recipient, the Chief Marketing Officer, but are created to sound as if the CMO is actually eavesdropping on a recording of his or her company's receptionist thwarting yet another unwary and untalented ad agency salesperson. (It's worth five minutes: go to the company's website, and click on "our work" and then on "radio" to play the messages.)
What does Hammerhead's innovation mean for CRM? In our buttoned-down, ROI-obsessed, prove-the-business-case, new media, B2B sales world, the connections that we have with others are often closer than we think, and it's possible to use these connections productively if we can break out of our cultural and technological boxes. Many salespeople bemoan that they "can't get through the gatekeeper," and some develop compensating tactics that violate ethical boundaries. It's great to know that it's possible to exercise the adage "If you don't have it, feature it!" so effectively.
I was in midway through writing an article with the dour title "Prospecting Doesn't Matter" (owing to Nicholas Carr's 2003 Harvard Business Review article "IT Doesn't Matter") when I serendipitously uncovered something that debunked my premise--at least for now.
A New Jersey company, Hammerhead Advertising (www.hammerheadadvertising.com), has created a campaign for new business by combining time-worn voice mail technology with an edgy message. After listening to the six samples available on the company's website, I was stunned by the power of the deceptively simple--but wildly innovative--approach. What makes the messages so powerful? It's not what you might think. There's no "value message," no glowing customer references, no gratuitous branding. It exploits an unvarnished, visceral approach that combines subtle humor with voyeurism.
The messages are delivered to the voice mailbox of the intended recipient, the Chief Marketing Officer, but are created to sound as if the CMO is actually eavesdropping on a recording of his or her company's receptionist thwarting yet another unwary and untalented ad agency salesperson. (It's worth five minutes: go to the company's website, and click on "our work" and then on "radio" to play the messages.)
What does Hammerhead's innovation mean for CRM? In our buttoned-down, ROI-obsessed, prove-the-business-case, new media, B2B sales world, the connections that we have with others are often closer than we think, and it's possible to use these connections productively if we can break out of our cultural and technological boxes. Many salespeople bemoan that they "can't get through the gatekeeper," and some develop compensating tactics that violate ethical boundaries. It's great to know that it's possible to exercise the adage "If you don't have it, feature it!" so effectively.
Your Cutting-Edge Strategy Won't Cut It in 2012
(First Published December, 2007)
Demographic and Financial Trends Will Change the World of Buying and Selling
Which of the following two definitions more closely reflects your beliefs? "Salesmanship is a battle of organized knowledge against unorganized knowledge or ignorance" or "salesmanship is the ability to make a mutually profitable exchange of values"?
In fact, both definitions appear in a book first published almost 100 years ago, Salesmanship and Business Efficiency by James Knox. The second definition is relevant, but the forces of social and technological change have rendered the first definition all but obsolete. Laws, theories, ideas and assumptions become stale at different rates. The force of social change is marked in another way: In 389 pages, the book includes no references to women.
Will your strategies become stale—or obsolete—in the next five years?
By 2012, will familiar terms such as "cold calling," "individual contributor" and "lead lists" mean anything to sales and marketing professionals? Will "word-of-mouth marketing," "collaborative teams" and "integrated marketing databases" be our buzzwords?
Based on interviews with industry experts and scholars, here is what I predict will happen demographically, financially and technologically to the world of buying and selling. In a companion feature, I will discuss how social networking, environmental responsibility and the redistribution of information power will redefine sales.
Trend 1: Retirement of the early baby-boom generation
The cascading retirement of the baby boomers, whose most senior members will be 67 in 2012, has significant implications for selling, including how to transfer knowledge and how to staff future sales organizations. Because much of sales knowledge is tacit, organizations will need first to define knowledge and then systematically capture and share it, or the knowledge will leave the enterprise along with the worker. The exodus will create a dearth of highly experienced sales professionals—at least initially.
‘Organizations will need first to define knowledge and then systematically capture and share it.’
At the same time, new entrants to the workforce in 2012 will change the culture of buying and selling. Those individuals, born in 1994 and after, will bring technical competencies that the retiring generation learned only recently—or never at all. The new generation of workers is growing up in a digital culture and comfortable in an environment of near-ubiquitous and instantaneous mobile communications, information and video. Today organizations encounter challenges because younger workers may have developed skills on new software that employers haven't yet adopted. This skills imbalance will alter one change-management paradigm: Many organizations will be required to update their technology and processes to accommodate their incoming workforce—not the other way around.
Trend 2: Growing use of product virtualization
Ten years ago, the prevailing wisdom was that meeting face to face and satisfying the visceral need to "get the product into the hands of the customer" were correlated with successful sales outcomes. But the trend for product virtualization—a visual representation of something that emulates its physical properties—is very much driven by the financial needs of business and is not just a fad made possible through technology. That's because virtualization creates an emotional connection with a product and can generate demand before physical products are available.
That early demand enables many companies to profit from the cash-before-delivery outcome that Dell famously unleashed. Second Life, a web site known for virtualization, has promoted this capability to manufacturers from Adidas to Mazda. Through avatars—representing individuals in Second Life's virtual world—Mazda made it possible for anyone to test drive its Hakaze concept car, even though only one physical model existed. Once the virtual drivers demonstrated an appropriate level of online handling mastery, they could keep the virtual concept car and re-use it in subsequent activities on Second Life. By the time the first Hazkazes reach the dealerships, the benefits for Mazda's financial strategy will be huge: reduced time to financial break-even, increased demand, lower supply chain costs and improved forecast accuracy.
Trend 3: Increased predictive insight into customer behavior
Exploring ways to more accurately identify and reach valuable prospective customers will continue—even in the face of privacy concerns and regulation. Why? Investor-backed companies require lower selling risk and more productive demand generation for improved cash flow and rapid business growth. These financial imperatives are unlikely to diminish.
Companies will convert from low-productivity marketing activities—like mass mailings and telemarketing to broad markets (derisively called "smiling and dialing")—to tools providing unprecedented sophistication in targeting and reaching the most likely buyers. Average sales cycles will shorten into timeframes once thought anomalies, and results from measurements such as close ratio (the number of prospects completing a purchase transaction divided by the total number of prospects contacted) will improve dramatically. What underpins this capability is a combination of improved predictive analytics and what Stefano Grazioli of the University of Virginia's McIntire School of Commerce calls the growing use of the universal identifier. (Think of it as a large digital bucket that can collect lots of information about a person.) This powerful combination makes it possible to derive meaning from a rich trove of artifacts about an individual from disparate databases containing his or her personal information. Consider the predictive accuracy regarding a person's lifestyle and buying habits when data from his grocery purchases, warranty card registrations and motor vehicle records are combined versus just looking at grocery-buying habits.
The wave is already forming. The Wall Street Journal reported in October 2007 that a company called Acxiom has a database of 133 million U.S. households divided "into 70 demographic and lifestyle clusters." Two married women who are next-door neighbors can visit the same financial services web site at the same time and see two different ads. Differing lifestyle-related content will follow these individuals as they visit other sites, and software services to support immediate purchases will accompany the ads.
How will today's strategies evolve in light of the forces that are changing our culture and world? In Part 2, I'll look at how social networking, environmental responsibility and the redistribution of information power will redefine sales.
Demographic and Financial Trends Will Change the World of Buying and Selling
Which of the following two definitions more closely reflects your beliefs? "Salesmanship is a battle of organized knowledge against unorganized knowledge or ignorance" or "salesmanship is the ability to make a mutually profitable exchange of values"?
In fact, both definitions appear in a book first published almost 100 years ago, Salesmanship and Business Efficiency by James Knox. The second definition is relevant, but the forces of social and technological change have rendered the first definition all but obsolete. Laws, theories, ideas and assumptions become stale at different rates. The force of social change is marked in another way: In 389 pages, the book includes no references to women.
Will your strategies become stale—or obsolete—in the next five years?
By 2012, will familiar terms such as "cold calling," "individual contributor" and "lead lists" mean anything to sales and marketing professionals? Will "word-of-mouth marketing," "collaborative teams" and "integrated marketing databases" be our buzzwords?
Based on interviews with industry experts and scholars, here is what I predict will happen demographically, financially and technologically to the world of buying and selling. In a companion feature, I will discuss how social networking, environmental responsibility and the redistribution of information power will redefine sales.
Trend 1: Retirement of the early baby-boom generation
The cascading retirement of the baby boomers, whose most senior members will be 67 in 2012, has significant implications for selling, including how to transfer knowledge and how to staff future sales organizations. Because much of sales knowledge is tacit, organizations will need first to define knowledge and then systematically capture and share it, or the knowledge will leave the enterprise along with the worker. The exodus will create a dearth of highly experienced sales professionals—at least initially.
‘Organizations will need first to define knowledge and then systematically capture and share it.’
At the same time, new entrants to the workforce in 2012 will change the culture of buying and selling. Those individuals, born in 1994 and after, will bring technical competencies that the retiring generation learned only recently—or never at all. The new generation of workers is growing up in a digital culture and comfortable in an environment of near-ubiquitous and instantaneous mobile communications, information and video. Today organizations encounter challenges because younger workers may have developed skills on new software that employers haven't yet adopted. This skills imbalance will alter one change-management paradigm: Many organizations will be required to update their technology and processes to accommodate their incoming workforce—not the other way around.
Trend 2: Growing use of product virtualization
Ten years ago, the prevailing wisdom was that meeting face to face and satisfying the visceral need to "get the product into the hands of the customer" were correlated with successful sales outcomes. But the trend for product virtualization—a visual representation of something that emulates its physical properties—is very much driven by the financial needs of business and is not just a fad made possible through technology. That's because virtualization creates an emotional connection with a product and can generate demand before physical products are available.
That early demand enables many companies to profit from the cash-before-delivery outcome that Dell famously unleashed. Second Life, a web site known for virtualization, has promoted this capability to manufacturers from Adidas to Mazda. Through avatars—representing individuals in Second Life's virtual world—Mazda made it possible for anyone to test drive its Hakaze concept car, even though only one physical model existed. Once the virtual drivers demonstrated an appropriate level of online handling mastery, they could keep the virtual concept car and re-use it in subsequent activities on Second Life. By the time the first Hazkazes reach the dealerships, the benefits for Mazda's financial strategy will be huge: reduced time to financial break-even, increased demand, lower supply chain costs and improved forecast accuracy.
Trend 3: Increased predictive insight into customer behavior
Exploring ways to more accurately identify and reach valuable prospective customers will continue—even in the face of privacy concerns and regulation. Why? Investor-backed companies require lower selling risk and more productive demand generation for improved cash flow and rapid business growth. These financial imperatives are unlikely to diminish.
Companies will convert from low-productivity marketing activities—like mass mailings and telemarketing to broad markets (derisively called "smiling and dialing")—to tools providing unprecedented sophistication in targeting and reaching the most likely buyers. Average sales cycles will shorten into timeframes once thought anomalies, and results from measurements such as close ratio (the number of prospects completing a purchase transaction divided by the total number of prospects contacted) will improve dramatically. What underpins this capability is a combination of improved predictive analytics and what Stefano Grazioli of the University of Virginia's McIntire School of Commerce calls the growing use of the universal identifier. (Think of it as a large digital bucket that can collect lots of information about a person.) This powerful combination makes it possible to derive meaning from a rich trove of artifacts about an individual from disparate databases containing his or her personal information. Consider the predictive accuracy regarding a person's lifestyle and buying habits when data from his grocery purchases, warranty card registrations and motor vehicle records are combined versus just looking at grocery-buying habits.
The wave is already forming. The Wall Street Journal reported in October 2007 that a company called Acxiom has a database of 133 million U.S. households divided "into 70 demographic and lifestyle clusters." Two married women who are next-door neighbors can visit the same financial services web site at the same time and see two different ads. Differing lifestyle-related content will follow these individuals as they visit other sites, and software services to support immediate purchases will accompany the ads.
How will today's strategies evolve in light of the forces that are changing our culture and world? In Part 2, I'll look at how social networking, environmental responsibility and the redistribution of information power will redefine sales.
Subscribe to:
Posts (Atom)
