Gerry Harvey, (Harvey Norman) was recently bemoaning the culture of discounting in our retail sector. He was saying that retailers had lost the plot and didn’t know how to sell real value anymore.  He said they had fallen foul of a culture of constant discounting as the only way to attract customers, which was tantamount to business disaster and a degradation of the retail sector. I happen to agree with Gerry in this instance.

He went further by saying that retailers were failing to find out what customers really wanted and what they really valued.  He said retailers weren’t offering choice – a range of options of different value and therefore were not selling.  He went on to say that while a ‘sale’ may attract customers to a store, you still needed to put the effort into selling.  Selling doesn’t happen by itself.

I’m not a retail expert, however, discounting, sadly, appears to be main stream in Australian retail businesses.  Rather than a ‘sale’ being a rare event, it now seems, everywhere you turn there is a ‘sale’ or discount war waging.  In short, over the last 10-15 years the consumer has been habituated to look for cheap, cheap, and cheap.  The real value to, we, the consumer, of having a range of products and services to choose from across a wide value scale, seems to be lost in a mentality of it must be ‘cheap’.

It begs the questions “How has this come about?” and “Who started this discounting avalanche?”  It wasn’t always this way.   I recently had the opportunity to visit the exhibition ‘til you drop – shopping, a Melbourne History’ at the Victorian State Library which is about retail shopping in Melbourne across the last 100+ years.  I found it quite an enlightening and educational experience. For instance:

“In the 19th century, ‘retail therapy’ had a different meaning from how we understand it today. Shopping was often promoted as combining commerce with intellectual or aesthetic benefits.  Influenced by British morals and values, the display and purchase of goods were expressions of taste and self-improvement.” This is certainly a far cry from ‘cheap, cheap, cheap’ we now hear.

It seemed that shopping in the 19th century had a higher purpose to it.   Perpetual discounting sadly does not.

Constant ‘discount sales’ erode margins and low or no margins means a business is not profitable and therefore not sustainable.   Gerry and other retail experts will tell you that there is a time and a place for discounting – moving old stock, stock liquidation, seasonal or special events for instance.  Discounting should NOT be seen as a regular occurrence or constant ‘way of life’ as this will affect the buying patterns of consumers i.e. people will wait for the ‘sales’ instead of buying across the year.  They will pick their way through the plethora of ‘sales’ on offer every day, meaning no one has to pay full price for anything across the year which in turn forces retailers to enter a never ending loop of discounting.

Discounting in any business sector, retail or business to business, may increase turnover initially, but as a constant strategy comes at a cost which, in the long term, may create more severe problems than we had intended. This may include poorer sector and business performance, less investment in new ideas and products, loss of jobs, business closure, decreased diversity, poorer quality products sourced in place of better quality offerings, which can lead to increased customer dissatisfaction, and less choice as a result.

Less choice means we end up only getting access to products that are of a lesser quality. This creates poorer product performance, a diminished product life, and increased and unnecessary consumption, resulting in greater costs than if one had invested in a better product or service in the first place.

Who wants to pay for more ‘crap’?   In a world where more and more people are conscious of overconsumption, you can see that this journey down the ‘cheap’ road doesn’t lead to a very good place.

Maybe retail needs to return to its ‘higher purpose’ roots.  Another excerpt from the ‘til you drop’ exhibition bears this out:

“While bargains are always popular, when standardised brands replace some specialty and locally produced items the quality of products can become less reliable.  Today, many shoppers are returning to smaller stores selling organic or locally-grown and made produce.  Supermarkets are, in turn, following this trend and promoting gourmet sections and their own ranges of organic and specialty products.  The fact that consumers are becoming more aware of the impact of goods and shopping trends on the environment can be seen in new approaches to packaging and transportation. People are increasingly recognising that more sustainable shopping practices can reduce their ‘shopping footprint’.”

This is why I propose that a climate of perpetual discounting may potentially lead to the erosion in our quality of life and may limit our ability to make the right and best choices for ourselves, our families, our businesses, our communities and the environment.  Is our culture of ‘discounting’ potentially leading us to a false economy? If so, ultimately, this will ‘cost’ us a whole lot more.

Gerry, I suggest you and your retail mates take a collective look in the mirror and do a bit of reflecting on the potentially larger issues ‘constant discounting’ may be creating for us all.  And while you are at it, why not pay a visit to the ‘til you drop’ exhibition which has some great pearls of wisdom about creating real value in retail.

Special thanks also go to Andy and Errol, my fellow tennis parents who work-shopped this article with me one Sunday morning as our sons played tennis.

Remember everybody lives by selling something.

Author: Sue Barrett, www.barrett.com.au

Understandably everyone wants to save money, especially in these times, however we need to be aware of falling victim to false economy.  False Economy is an expression that refers to an action which saves money at the beginning but which, over a longer period of time, results in more money being wasted than being saved.

For instance, I have never understood why some people will drive half an hour across town to get their petrol two cents a litre cheaper, all the while using up what they may save by driving across town, notwithstanding the time it took to travel there and back in the first place.  In almost all cases this action delivers a net loss.

The following excerpt from Wikipedia on a False Economy provides some good examples:

A notable practitioner of false economy was King Frederick William I of Prussia, who was said by Thomas Macaulay to have saved five or six dollars a year feeding his family unwholesome cabbages even though the poor diet sickened his children and the resulting medical care cost him many times what he saved.[1]

The concept of a false economy is similar to planned obsolescence, whereby the lower initial cost of a false economy attracts buyers mostly on the basis of low cost, who may later be at a disadvantage.

Motivating factors on the part of the party engaging in false economies may be linked to the long term involvement of this party. For example, a real estate developer who builds a condominium may turn the finished structure over to the ensuing condominium corporation which is run by its members once the last unit is sold and the building has passed a final inspection. Longevity of the components of the structure beyond the final turnover of the facility may not be a major motivating factor for the developer, meaning that the result of the application of false economies may be more detrimental to the end user, as opposed to the developer.

A false economy affects businesses and consumers on many levels.  The quality of decision making is the factor here.  The cause and effect of our decisions may be creating a false economy in our businesses or our personal lives.  Anyone in the procurement profession (purchasing) who still holds onto ‘cheapest’ being their only option for purchasing from suppliers may be setting their companies up for failure or disaster.

For instance, many SME businesses may be tempted by the cheap telco service offering or cheaper equipment.  On the surface, these cheaper offerings could appear to be great deals, but before one buys anything they should do some analysis beyond the obvious price on offer.  Just because something is cheap does not mean it is good for you or your business.  A cheap phone or communications system could mean unreliable phone or poor internet connection, poor equipment performance resulting in frustrated or lost customers who cannot communicate with you or your business, a poor reputation, or poor staff retention.  The so called ‘cheaper’ service just cost you a whole lot more than you intended to pay.

The expression ‘buyer beware’ also springs to mind. It is not just the sales person’s job to convince us to buy it. Our job as the buyer is to do the math and to look at the genuine ROI (return on investment) of our purchase.  Any self respecting sales person is well equipped to look at the consequences and ROI of each purchase, and would help you make a sound decision based on facts.  We need to work together to ensure we do not enter into a false economy for all our sakes.

So what are we really purchasing?  Thinking beyond the immediate outlay of money, we can view every purchase in our personal or business life as an investment.  I have just had a salient lesson in false economy courtesy of my eldest son and his friend when they purchased some remote control products online.  They found some great planes on a website whereby they could purchase them at a considerably cheaper price than elsewhere.  Seeing as they were paying for them with their hard earned pocket money, the price looked great to them.

You can see what’s coming can’t you?  8+ hours of my time attempting to communicate with the US online company to get our order processed involving numerous attempts to get what we ordered fully shipped. This was a classic case of false economy.  Even though my son and his friend went through feelings of devastation at the thought of losing their collective $740, feelings of disappointment when their order was not fully filled and the shipping costs were out of proportion, and resignation that not everyone fulfills their promises, the lessons for all of us were invaluable.

They learnt about checking out the reputation and credibility of a company first, the cause and effect of buying and selling ‘cheap’, that trying to fix problems can take a lot of time and cost money, and that plenty of people have lost a lot more than they did. So we were able to put it into perspective, albeit that $740 to an 11 and 13 year old is a lot of money.  They also discovered the value of thinking before you act, the consequences of actions, and how to process a range of emotions that we feel when things go wrong. Perhaps most importantly, they learnt how to respond with patience and reasoned analysis to get what you want rectified, instead of threats.
All in all it was a great lesson, learnt early in life with limited consequences, and hopefully one they will carry with them into the future to help them on their way.

So if using a cheaper alternative costs you even one sale, is it worth it? While in some cases the answer may be yes, in many other cases the more expensive option may be the one that provides the greatest return for you. As you’ve just read, ‘costs’ can involve a lot more than just dollar value.

Special thanks go to my son Josh and his friend Nick for the inspiration for this article.

Remember everybody lives by selling something.

Author: Sue Barrett, www.barrett.com.au

The other week I ran a webinar for SmartCompany.com.au on ‘How to clearly manage and measure your sales team’. During the webinar I was asked many questions, one of which came from a senior sales leader, “With some time to reflect over the Christmas break, what is the one thing I should focus on getting right for my business?”

Given that business as usual is not ‘usual’ anymore, I suggested the following:

1. Review your business and sales strategy

• Do you have the right strategy in place?
• What has changed over the last 12 months
• How has your client mix changed? i.e. are your key accounts still key? What emerging markets have come into play that you need to be in?
• Does your tactical marketing plan still support your sales and business strategy?

2. Do you have the right sales team structure in place?

• Is your current sales team ‘fit’ enough to deliver your strategy?
• If not, can you get them to the standard where they will be competitive?
• If the answer is ‘No’, then what types of sales force do you need?
• Do you need more reps in the field, more people on the phones, or do you need a different type of sales force?
• In an ideal world what would your sales force look like? How would it function if it were to deliver effectively on your sales strategy?

By asking yourself these questions and reflecting on the current state of play in your market and business you can imagine what it could be like.  The market and how you intend to apply your strategy will dictate the kind of sales force you need.

Do you have the sales force your strategy needs for 2010?

Not sure? Then I recommend you read these previous posts Success is a moving platform- How do I keep my sales team on it and Create your ideal sales force blueprint for more insight and guidance.

On a final note for the year end, I would like to thank the my team at Barrett and for the opportunity to write to an ever growing readership; I have been writing since February 2007 and the feedback I receive has been fantastic.

And don’t forget to complete the Barrett poll on The 12 Sales Trends of 2010. We want to know what you think will be the number one sales trend in 2010.

We will publish the results of the most important Sales Trends for 2010 in January. Make sure you are subscribed to our blog to receive in depth articles on The 12 Sales Trends of 2010, starting in January with the No. 1 trend as voted by you our readers.

On that note I wish everyone associated with Barrett, our team, our clients, our suppliers, our  supporters and our families all the very best for 2010 and look forward to contributing more articles on the wonderful world of selling.

Remember, Everybody lives by selling something.

See you in 2010.

Cheers
Sue

Author: Sue Barrett is Founder & Managing Director of BARRETT

First of all what does CRM stand for?  CRM = Customer Relationship Management.

The concept of CRM has been around for a long time. The original form of CRM was a manual card system kept by a sales person that usually sat on the sales person’s desk or alongside them in the car.  These client cards sets were very valuable to the sales person as this is where they kept important customer information such customer contact details, key contacts in the company, a running commentary on their activities, personal and product preferences, buying patterns, business connections and so forth.  Each card was a dossier on each client.  To successful, well managed sales people, their client cards were gold.

However, often times, this vital data resided with the sales person alone. The company, the sales person worked for, did not have ready access to this important information and when the sales person left the company more often than not so did the client information, client relationship and sales did as well.

The ‘softwarising’ of CRM for businesses is seen as a major breakthrough in being able to capture important client information and better manage client relationships.  CRM promises faster customer service at lower costs, higher customer satisfaction, better customer retention and ultimately customer loyalty and more sales.  However many companies still believe that CRM is simply software, or technology and the full benefits of CRM are not being fully realised by business.  CRM is much more than just a data-mining tool.

CRM is not (just) technology.

CRM is a business strategy!

Your CRM has the potential to and should be your corporate memory.  It can be the  archeological record of your business.  In fact, if introduced and applied correctly, one of the most significant benefits of having and using a CRM in your business is being able to fully realise and map the true value of your clients as company assets.  Besides the obvious benefits to you and your business, if ever you chose to sell your business, having a CRM with all this valuable information tracked and mapped can be valued and sold for premium.

This trail of information becomes a real asset in itself. A potential buyer can see your business in real client terms and understand the value of the client relationships to the business.  Therefore instead of the wisdom and knowledge going out the door with the previous owner it can be captured and retained with the new owners to be further cultivated and developed.

NB: Not  all data is good data. You must make sure you have the right information in place.  Too many CRM’s are filled with rubbish data and the wrong stuff making them a liability not an asset.

As a CEO, you can’t make the right decisions if you don’t have the right data/information foundations in place.  If you are going to get the best benefits from a CRM strategy and CRM tools you need to know how to you are going to align your key business objectives between your clients, sales people, suppliers and the rest of your business so every piece of relevant information and action adds value to the client fulfillment process.

The interconnectedness of clients to your business can begin to be truly mapped and you will then see how everyone in your business can affect the retention and growth of your clients, not just your sales people.

According to Mark Parker, MD of www.SmartSelling.com and expert in CRM’s and Customer Systems:

“Sales reps often represent the “face” of your company. In order for them to do their part in driving outstanding sales results, they should be empowered to put their best foot forward when representing their company. To do this, a Sales Automation or CRM needs to be in tune with their needs.  Putting their best foot forward is going to mean many things.“

Further to this I would like to add that a CRM should also be in tune with your customers needs helping them have the best experience they can have with you.

What does an effective CRM system look like?

An effective CRM system should be what your strategy needs and wants it to be.  These days you can get access to open source CRM software where you can configure what you want in your CRM so you do not have to be tied to proprietary CRM’s that cannot be customised to your needs.  Also CRM’s do not have to be prohibitively expensive either. Many people have put off getting CRM’s in the past due to their high cost and focus on big corporations.  But now good CRM’s systems are available for SME’s and home based businesses at very cost effective rates.  For instance we use SugarCRM at Barrett which is an open source system we can configure to suit our business needs.
This means you need to think carefully about what you want your CRM system to do and be and who you partner with to make it work for you.
A good place to start is to:

1. Know your business  strategy and key outcomes you want to achieve and work backwards from there.
2. Know your customer, their needs, wants and motives and your path to market
3. Appreciate the length, width and depth of the relationships between the customer and your organisation
4. Understand how you properly manage of all interactions with your customer
5. Know what your sales and service people need to do make sales happen in your business.
6. Aim to build a business system that manages prospects, clients and projects.

Look at what data, behaviours, and outcomes you want to track:

• Client data, sales person activity data, product sales data, effectiveness of marketing initiatives including your website, direct mail/email campaigns, etc.
• What behaviours do you want to encourage and reinforce in your sales and service teams as well as your clients and prospects?
• What do you want to measure by way of lead and lag sales indicators?
• How do you want to communicate data internally and externally?

Important point: you do not want you CRM to turn your salespeople into glorified desk jockeys.  We need to make sure any CRM is easy to use, doesn’t take necessary time away from vital interpersonal sales activities.  If you think your CRM can replace your sales team you will fall short in your efforts.  If your business needs to be in personal contact in some way with your clients you need your CRM to enhance these relationships not replace them.
Here are some ways a CRM system can serve you well:

• Provide immediate insight into prospect and customer leads originating from any channel
• Provide deep visibility into the sales pipeline and opportunity details which quickly produce accurate sales forecasts.
• Allow for a consistent, informed, and personalised customer communication approach i.e.  automated emails relevant to the specific customers
• Give sales people and everyone in your business access to a consolidated view of the customer across your organisation – this will allow everyone in the organisation to know how they can help play their part in taking control of every opportunity and managing it to a successful conclusion
• Encourage, enforce and track best-practice sales methodologies you want in your sales  teams i.e. logging of Lead Indicator Activities such as: # of prospecting calls made, # of client meetings had; # of real deals in the pipeline, # of sales made: # of cross sales made, # of sales made with new clients, # of sales made with existing clients, # of follow customer service enquiries, # of service calls, etc.
• Encourage, enforce and track best-practice service methodologies you want in your customer service and support teams i.e. logging of Lead and Lag Indicator Activities such as # of follow customer service calls made post sales, # of service calls made, # of customer service calls and complaints received, etc.
• Monitor and map effectiveness of have automated sales and marketing activities that are specific to the customers and markets
• Steamline and automate those customer activities that can go online i.e. confirmation emails, automatic emails sent out at periodic intervals for things like renewals for instance
• Map work in progress with clients and staff allocated to client projects
• Have the ability to integrate with your website and keep track of web activity
• Support your entire frontline sales and sales lead management team with the right information they need to quickly and efficiently fulfill all of their daily requirements.
• Deliver knowledge at the point of action
• Keeps vital customer data in the business whether the sales person stays of leaves thus creating a valuable company asset.

Word of caution: Before you even think about integrating Twitter or Facebook into your data mix and CRM, which is a hot topic at the moment, make sure your current data is clean and relevant because if it is not then you will be piling more garbage on an already big garbage heap and there’s no value in that.

Remember CRM systems are tools that should support, enhance and grow the customer relationship by giving your sales team and others in your business access to vital information they can act upon with purpose and in the easiest manner possible.

A CRM should not be an imposition on anyone, a CRM should be a part of your vision to continually improving the relationships with your customer, your sales team and everyone in your business.

CRM is a strategy and way of life not a piece of technology.

Remember everyone lives by selling something.

Happy selling.

Sue Barrett is Managing Director of BARRETT Pty Ltd.

I recently had the opportunity to attend the inaugural Optimising the Sales Force Conference (http://www.osf2009.com.au), along with over 120 high level sales leaders across Australia.  I was privileged to be part of the panel of international and local experts presenting on sales effectiveness where we explored the latest research on sales strategy, leadership, learning and development, sales management, sales people, and current market trends.

This was the first time in Australia we have had the opportunity to come together as a profession and share ideas and discuss important matters moving forward. There have, of course, been industry specific forums held for the profession of selling but not one that brought industries of all kinds together to discuss sales specifically. It’s hard to believe but this was the first time this has occurred in Australia and about time to! It was really about driving a better profession.  Many people are unaware of just how skillful you need to be to run a sales team or lead a successful sales career.

The conference was full of important information and we also had the privilege of hearing from the elder statesmen of strategic selling 78 year old Bob Miller of Miller Heiman fame, who pulled no punches and reminded us of the foundations of our success. We also heard from Tom Snyder who is world renowned for his expertise in creating high performing sales teams.

Over the next few weeks I thought I would share with you some of the insights and findings from the conference in more depth but here is a summary of the topics we discussed and where our attention was focused.  This might give you some insight into where the world of selling is heading.

• Everybody is in sales: there was overwhelming agreement that everyone in business is in sales – You are either selling or supporting someone to sell.  If your people are disassociating themselves with sales then you need to let them know in no uncertain terms we all live by selling something and they had better get with the program or get out.
• New customer behaviours: the economic downturn has changed how customers conduct business and interact with suppliers, while this comes as no surprise there are now new customer behaviours we need to contend with.  In particular, the increase in risk aversion was cited as being one of the most contentious issues.  This risk adverse approach is leading to indecision by clients meaning that rather than losing to a competitor, nothing happens.    So it is critical that sales people are able to work more strategically with clients and challenge them to help them make good decisions moving forward.  This requires a more assertive, confident style of sales person.
• The Challenger Sales Person: research by The Corporate Executive Board Company reported that we need to find and cultivate the ‘Challenger Sales Person’ who is best suited for these markets moving forward.  Some of the key characteristics of these people are that they always have a different view of the world, understand the customer’s business, love to debate, and challenge the customer’s ideas and perspective; in short they are at their best as commercial educators and bringers of new ideas and innovations to help businesses function better.
• Coaching, coaching, and more coaching: At least 40-60% of a sales manager’s job should be dedicated to coaching their sales people.  Yet it still remains an area that is poorly executed.  We were shown excellent case studies which demonstrated the financial return of sales coaching.  Many of the case studies indicated that a blend of competent internal sales coaching by sales managers supported by external experts in sales coaching was very advantageous to their sales teams’ performance and productivity.
• Role clarity and clear expectations: make sure salespeople and sales managers understand their roles and what is expected of them.  Make it explicit and ensure people are adequately skilled to carry out their responsibilities.
• Clear the dead wood quickly: sales managers spend too much time with people who produce too few results.  Focus your attentions on those people who are already showing they want to do well and are actually doing their job.  You have more hope in getting to your better performers to be much better producers than wasting your time on people who will never perform.  As Tom Snyder said “Sales managers are guilty of thinking they can ‘save’ these people from themselves” – his advice is “get rid of them now!”
• Insight and awareness: despite all the skills, tools, and processes around salespeople and sales managers need to be able to develop their own internal guidance and support systems.  The ability to reflect on our own performance, be resilient, show empathy, and work ethically was high on the agenda. Personal insight and making a personal commitment to the corporate objectives is also important for ongoing success.
• Connect strategy to activity: your strategy should translate into practical actions people can apply and see results from.
• Marketing and sales unite: marketing needs to support sales and sales must support marketing.  There is no in between.  Hugh McFarlane from MathMarketing stressed the importance of making sure that all touch points and messages are in alignment.
• Really connect with your key clients: Bob Miller pressed home the importance of being truly connected to your best clients, however he said you cannot have a strategic relationship that is only one way.  Your clients must want it as much as you do and there is mutual agreement on the conditions of the relationship. He stated that most companies are very poor at managing this aspect of their business and it leaves them vulnerable to losing major accounts.
• Corporate assets: today’s reality is that in addition to people, property, plant equipment, and IP some of the biggest and most often overlooked assets are companies strategic accounts.  They need to be on the agenda of the ‘C’ suite i.e. the CEO, CFO, COO, etc.

I hope that this provides you with some valuable information and insights into what is happening in sales today and into the future. I will go into more depth in the ensuing weeks about these and other topics we covered.

Happy selling.

Sue Barrett is Managing Director of BARRETT