Not all customers are good customers

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Not all customers are good customers

September 3, 2007 in Sales Planning, Sales Skills

Ever had some customers who spend very little with you but take up enormous amounts of your time? Nothing’s ever right, they quibble about every cent and they do not intend to spend much with you anyway.

Or those customers who are really nice and you get along with them very well, but you know they do not have the potential to develop into long-term revenue generating accounts for your business.

What do you do? You need sales, but at what cost to your business? These types of customers, in effect, keep you from working with customers where you can get a better return on investment.

Segmenting your customers and your market and then working out the most cost-effective way to sell and service these customers is a very good idea. We have all heard of “ABC” accounts. As being the best, Bs the next, and so forth.

One way I have found useful when segmenting my customer base is to identify the POTENTIAL they have to do a range of business with me over a period of time and then look at the VALUE in terms of revenue and profit they can bring.

Q. What defines a high potential, high value customer for your business?

A. Someone who is doing a lot of work with you and has the criteria to do

more work with you in the future. These are your premium accounts and should

be looked after with great care.

Q. Who should you go after next?

A. The customers or potential customers who display the characteristics of high potential, but low or no value to your business. Someone who is doing a little or no work with you and but satisfies the criteria to do more work with you now or in the future.

So what does it cost you to get a sale? And are you prospecting in the right area to give you and your business the best return?

Surprisingly some sales people do not know the answer to these questions. In particular, when people start out in business, many do not think about their markets nor about prioritising their sales efforts. If this happens they can find themselves making sales but at a cost to their business.

Depending on the industry, it costs an in-field sales person and their company anywhere from $500 to $1000 per client sales meeting. Given this cost you would want to be very discerning about; (a) how long it took you to get a customer on board and (b) about the value and potential of the customer could give your business.

If you look at your market you can see that you do not want every sales opportunity. However, don’t mistake getting a small sale with a high potential low value customer as being a waste of time – these type of sales can be the “thin end of the wedge” to much larger sales, and if nurtured can lead to more sales down the track.

What I am guarding against is trying to sell to those customers who do not and never will meet your criteria for high potential and high value. In sales it is just as important to know when to say no and walk away. It’s about how you use your time and effort.

Most people in SMEs are time poor and chasing after sales phantoms is time consuming and potentially exhausting. If you think a potential client sales meeting is going nowhere and will lead to nothing for you, then exit – but gracefully. Don’t ditch them, instead be pleasant and state that you are not in a position to help them and that someone else may be better suited to give them what they need.

Make sure you have other referrals or sources handy that you can give them. A good idea is to tee up those referrals before hand and know where you sit relative to each other in the market. This way you will leave on a good note. And you never know where those customers may turn up in the future. They could turn up somewhere else and be the right kind of client for you then.

Alternatively, if you come across customers in who are low value and low potential in relation to your current sales structure and effort – that is, it’s too expensive to sell to them – then a telephone sales person maybe the right level of sales effort required. A telephone salesperson costs a business less and can be used to make smaller and more frequent sales. Then again if that is too expensive you may be able to use online ordering to sell and service them.

Defining and understanding your target market is integral to sales planning as it allows you to determine where you will get the best return on investment from your sales efforts.

So scan for the right criteria of what viable prospect/customer looks like for you. If not properly evaluated, many sales meetings can become very expensive cups of coffee.

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Missed & Lost Sales Opportunities

August 20, 2007 in Call Reluctance, Prospecting, Sales Skills

Not enough new business coming? Sales drying up? Not making a satisfactory impact when in front of prospective clients?

If this is happening to you, consider your sales effectiveness and your sales efforts from these two angles:

Missed sales opportunities.
Lost sales opportunities.

If market conditions are right, and you have good products or services, then you may want to take a look at your own efforts. Your poor sales efforts may be due to:

Missed sales opportunities: Put simply, missed sales opportunities are all about a lack of prospecting activity. If there is little or no prospecting for new business in new and/or existing accounts you will not get sales. You cannot lose sales if you’re not there to get them in the first place.

Remedy: Develop a prospecting plan and get out and see and/or speak to more people in your target market on a regular and consistent basis. Prospecting requires sales people to establish contact with people who might buy your products or services. Whether it’s phone prospecting, face-to-face prospecting or group prospecting, inbound or outbound, nothing gets sold until salespeople get in front of and/or talk to potential buyers. Prospecting is… The identification of new business opportunities in new or existing accounts!

Lost sales opportunities: You can only lose a sale when you are engaged in a sales conversation with a prospective viable client. (A viable client is someone who has the willingness and ability to buy from you, the authority to make a decision and a genuine need for your product or service offering).

If the client is viable and you lose a sale, it is most likely due to your lack of capacity to convert a sales opportunity into a sale – and sales revenue. This is usually due to poor selling skills and techniques such as having no logical sales process to follow, poor questioning skills, inability to relate to and empathise with your customer’s situation, making poor recommendations, etc.

Remedy: Get trained in a proper evidenced-based sales process that teaches you how to sell well. More than 90% of sales people follow no logical process when selling. They fly by the seat of their pants. Sales people need clear sales communication models, questioning skills, a process to match client needs with their products and make effective recommendations, and skills to secure client commitment and close a sale.

I hope this helps. Happy selling.

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Costing cutting at the expense of sales? Bad move

August 13, 2007 in Sales Skills, Sales Training

I don’t know about you, but when markets start to tighten or when things feel a bit uncertain, instead of cost cutting and bunkering down, I have found that you need to do precisely the opposite. You need to invest in your sales efforts with good strategy, sales training, good sales management and good sales coaching.

I have experienced selling in tight markets over the years and found these times to be some of my most successful sales years. Why? Because I took advantage of everyone else’s pessimistic approach as they sat around complaining, and I got out there and learned how to survive and thrive in tight markets. While you may hear others saying things are bad and they can’t make any sales, you know there are still potential clients out there who need your help/products/services.

Beware where your thoughts take you and whom you listen to. We have a saying at Barrett: “Watch who you let near your mind”.

In tight times it is too easy just to cut costs at any expense. Cutting costs on your sales efforts by not training and coaching your sales staff or investing in sales support resources just sends you further backwards.

Here is what some of my close business contacts, who hold senior sales management roles in large public companies, had to say about cost cutting at the expense of their sales teams and sales efforts.

They are lamenting the current fad of the career CEO and their gangs who come in for three or four years only and whose only strategy to drive up the share price is to cut costs. Their experience is that these CEOs show no signs of investing in the development of the businesses or their people.

These senior sales managers stated that they have repeatedly asked for and received no investment funding to develop their sales teams for over two years. One of these managers has moved from one public company to another only to find exactly the same issue, despite promises to the contrary when they were being interviewed for the job.

They have put their economic cases and research evidence to senior management about how important it is in this day and age to invest in developing sales teams so they can be competitive and fit in the market place. They have stated that their “competitive edge” is their sales team, not their products or pricing any more.

They stated that developing their teams helps them attract and retain more and better quality customers, make more sales and attract and retain good staff. Just like a sports team, these senior sales managers know that they and their teams need regular training and development to leverage their skills and talent in the market place.

But their requests continue to fall on deaf ears. In my contacts’ opinions, they see their respective CEOs and their gangs only thinking short term with no eye for the future and “cost cutting” as their only maxim.

They admit they are in despair. Here is what they shared with me about their sales teams:

“Management refuses to invest in people. My sales people are demotivated and many are wanting to leave except they won’t because they know the company is paying (bribing) them more than they are worth in the market, so they’re all waiting for the ‘package’ – how can I run a sales team like that? Sales are stagnating. Staff engagement is really low across the whole business. It’s depressing.”
“As much as I am out in the field with them and coaching for better performance (which they really appreciate), they know that senior management have no interest in their future well-being or development. My team wants to be better and would love more training on current sales practices but they know they won’t get it here. I am at great risk of losing my team.”

Whether you are large or small, do not fall into this trap. The short, medium and long term consequences are lethal. Be prudent with your dollar, for sure, but don’t kill off the source of your revenue stream.

Regularly invest in your sales team’s development. It doesn’t have to be full blown training programs (although these are helpful on at least a yearly basis). It can be as simple as getting in an expert guest speaker at your sales meetings or giving special executive coaching sessions to your top sales performers to make them even better. It’s what keeps us healthy, fit and motivated.

If you are thinking of using external sales consultants, coaches or trainers to help you improve your sales efforts, I recommend you assess them using the following criteria:

Do they have experience and a proven track record working with companies to create high performing sales teams?
Do they know what makes great sales people great?
Is their sales training content relevant and up-to-date for today’s competitive market place? That is, are they incorporating sales process, sales planning, influencing, developing meaningful business relationships, emotional self management etcetera into their training?
Is their training methodology designed to develop sales teams to deliver your sales plans consistently?
Can they show specific evidence of improving sales results in businesses?
Does their methodology ensure that you can build a sustainable sales culture over time?
Are they able to translate complex initiatives into practical, tactical road maps you and your people can use immediately?
Do they ensure that you can measure the right sales metrics so that you can then manage by them?
Do they have proven competency based approach which leads to observable behaviour change at all levels?
Do their consultants, coaches and trainers all have industry-based commercial and sales experience?
Do their coaches and trainers have relevant industry-recognised qualifications in coaching, facilitation and assessment?
Do they have experience in sales culture and process transformation across industries?
Do they help you make more money than the cost of having them in your business?

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Influencing vs Negotiating

August 6, 2007 in Attitudes & Behaviours, Emotional Intelligence, Sales Relationships, Sales Skills

It has often been said that very strong negotiation skills are critical to being a high performing sales person. However, findings from our “sales force fitness” profiling work, where we profile critical qualities for successful sales performance in many businesses, large and small, is telling a very different story.

Before you invest your training dollars into negotiating skills training for your sales team, you might like to think about investing it into influencing skills training instead.

Why? The ability to positively influence prospects or clients towards your brand and product offering – more so than negotiation – is what is needed in today’s market.

Products/solutions are often quite clearly defined and a salesperson’s ability to negotiate price and value-added services is limited in today’s market.

We are now finding some companies are setting prices for their sales teams with no room for negotiation, thus eliminating price negotiations altogether.

(Not always a bad thing if you ask me, given all the pricing discounts I have seen sales people giving away unnecessarily over the years.)

So what is a sales person to do now?

We are consistently hearing in interviews with high performing sales managers and sales people that the ability to positively influence the client is a more critical competency than the skill of negotiating. This has direct relevance to the emotional intelligence (EI) area of managing others emotions.

The emotional management of others is the skill of influencing the moods and emotions of others. A sales person’s ability to:

Influence a prospective customer to say ‘yes’.
Overcome a customer’s reservation towards a new product.
Help a client feel enthusiastic about a product they recently purchased.
Plan with a client how to best engage their ‘economic buyer’.

These are critical to success in business today.

In addition, we are finding that:

Accurately reading the client, gauging their reactions and then adjusting your own style is also being highlighted as a key competency of high performing sales people. This is relevant to the EI competency of recognising emotions of others, emotional reasoning and managing others emotions.
Building relationships and trust is also critical. For the past three of our major corporate projects in assessing “sales force fitness”, it has been cited as a key point of competitive difference. The ability to build trust-based relationships is influenced by a number of EI competencies – emotional self awareness, emotional awareness of others, ability to influence others’ emotions and emotional control.

Ask yourself: “How effectively are my sales people perceiving, understanding, reasoning with and manage their own and others’ feelings.” These skills are cornerstones to successful selling, as emotions are an inherent part of why people buy and why they do not.

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Changing sales perceptions

July 9, 2007 in Sales Relationships, Sales Skills

Stop for a minute and reflect: What is your view of selling? Has your perception of sales changed over the years?

Your answer is most likely ‘yes’ if you are a customer or salesperson in business to business (B2B) sales. But not if you are a customer of retail. More about that another time.

Today’s changing B2B and high-end B2C sale practice styles are an adaptation to the environmental forces. The change towards people-centricity is evident in a number of organisational functions, in particular the sales function where there has been a significant shift from product-focused selling to relationship selling.

To serve their customers better, in ever more competitive marketplaces, companies feel compelled to reorganise their sales force around markets rather than products.

Findings from the Sell Like a Woman research project found that companies realise they cannot satisfy every customer and instead focus more on serving well those whose needs and expectations they can meet, in return having kept an ongoing customer and built up a good reputation.

After all, most businesses these days acknowledge that keeping an existing client is easier than acquiring a new one, especially with decreasingly less product differentiation, brand loyalty and information exclusiveness.

The perception of sales is improving within companies because the very nature of sales is transforming; only part of sales is about making a sale.

The position titles serve as good indication. “Sales representative” has changed and diversified into more co-operative titles such as Account Manager, Relationship Manager and Business Development Manager. All sales, but with more of a partnership focus to build their customers’ business.

One of the survey participants, Debra Templar, the director of Australian Retail Services, who has almost two decades of management experience, really hit the note, which resonates acutely with many other successful saleswomen, when she gave her impression of what is it her clients value the most about working with her:

“They trust me,” she said. “(They receive) value for money. They value expertise. They know I can sift through issues and flag situations they perhaps haven’t seen. I keep confidences. And I get results for them. I make them appear heroes to their people.”

This new strategic, multi-tasking approach to sales (of being a mini CEO) is a complex process of being an attuned listener and communicator and a creative problem solver on the customer level, and understanding or inferring customers’ broader business objectives, while having a sound knowledge of one’s own internal resources and abilities more generally. Those are some of the qualities that distinguish the most highly successful salespeople of the 21st century from the average.

Seeing the bigger picture or “playing god” isn’t easy, especially when no one expects that from a salesperson in the first place. Sales managers more often than not discourage any activities not directly related to selling a product right here, right now, to as many people as possible.

However, as Rosenbaum (1999) found, successful salespeople often disregard manager’s directives and achieve results in ways other than following these primitive and, at a first glance, intuitive rules alone.

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